My friends, I have read a lot about the coronavirus. Apparently it was spreading in a Washington state nursing home with fatal consequences. We are told that most people will overcome the disease, but our elders are the most vulnerable.
Apparently, it’s not so deadly with our children. And if they do catch the virus, they can be mostly asymptomatic but can still spread the disease if they don’t use good hygiene and sanitation.
So, I mention this because I want us to take all the necessary steps to keep our hands and our children’s hands clean (among other recommended preventive care measures), not only for our protection but for the protection of our elders.
Thinking about all this, I was also thinking about protections in tax laws for seniors. One of them that I think is particularly valuable is perhaps the deductibility of medical expenses.
So today let’s talk about this deduction.
Medical deduction for nursing homes
In particular, the cost of skilled nursing care in a nursing home as a qualified cost of long-term care is the most valuable. A semi-private room in a retirement home can cost up to $7,000 a month or more. And unless you have long-term care insurance, it’s mostly an out-of-pocket expense because Medicare typically only covers 100 days of skilled nursing care under certain circumstances.
Medical deduction for assisted living facilities
What about an assisted living facility, or ALF? Most older people choose to move into an assisted living facility because they aren’t entirely independent, but they aren’t necessarily dependent either – maybe something in between. And the cost of assisted living can reach around $3,000 a month in Texas. Can seniors deduct the cost of an assisted living facility? Well, the answer is a bit more complicated.
Conditions for benefiting from the ALF medical deduction
Generally speaking, the monthly cost of an assisted living facility is not considered a qualified long-term care cost unless the older person has evidence to support their need. This evidence could take the form of a care plan from a licensed medical professional who has certified that the person is unable to perform at least two activities of daily living without substantial assistance, or that the person needs substantial supervision to be protected from threats to their health and safety due to severe cognitive impairment. Assuming the individual meets either of these limitations and a licensed healthcare professional provides a written plan of care within 12 months of moving in, assisted living costs may be deductible.
The standard deduction could outweigh the medical deduction
That said, since Congress increased the standard deduction to $12,000 per year in 2018, the medical deduction might not be as valuable to some as it used to be — unless it’s associated with donations. charitable or other itemized expenses. And on top of that, medical expenses are deductible to the extent that they exceed 7.5% of a person’s adjusted gross income – another difficult hurdle to overcome. Nevertheless, for some seniors, the medical expense deduction is a valuable protection in our tax laws.
It is important that we continue to keep our seniors at the forefront of our concerns, both legislatively and medically — especially since I will be one too one day.
David Leeper is a Certified Federal Tax Attorney with 40 years of experience. He can be reached at 915-581-8748, [email protected] and leepertaxlaw.com