Nursing Home Cost

[arlo]

The Taxbook does not say much about Nursing Home expense.
TB says expense is deductible if principal reason for being there is to get medical care.
What person do you know that is in the nursing home that does not receive some form of medial care?
I have had people that are in the nursing home that in a short time they will die because of an illness and I have no problem taking the expense. Them I have people that treat it as a retirement home but they receive medical care.
How do you handle nursing home cost?

[BP.]

In my experience. the long term care facility will issue a document (a letter) that shows the breakdown or percentage of costs attributable to medical expense.

[arlo]

nursing home

In my experience. the long term care facility will issue a document (a letter) that shows the breakdown or percentage of costs attributable to medical expense.

Thanks BP I have never heard of that before. I will look into it.

[Jiggers]

Check this out:

http://www.elderlawanswers.com/tax-deductions-for-assisted-living-costs-7184

[TAX4US]

I have 2 clients in nursing home. 1 had a stroke and cannot do much of anything I write all off. The other is there because of unable to care for himself. I tend to look at the level of ADL they can or cannot do and deceide from that. May not be much help.

[Burke]

Nursing homes by themselves are not the problem. They are pretty much deductible expenses. However, most facilities these days provide tri-levels of care: 1) Independent Living; 2) Assisted Living; and 3) Nursing Care.

There may be entrance fees, and a TP may progress through all levels before its over. Independent living is just that, and rents would be a personal expense. Medical care would be deductible just like any other person living at home would be able to deduct. Assisted Living is different, and these are the people who must meet certain ADL's specified to deduct expenses. A facility will often give a letter indicating what percentage can be attributed to medical care. Nursing Care (or Memory Care/Alzheimers Units) or the third level is generally fully deductible.

[taxea]

In this case I would think care of someone who is unable to care for themself would qualify under the "medical care" list. Pub 17 has numerous examples. The client in the facility would have to be you, your spouse or a dependent and there are other restrictions on expenses incurred.

[FEDUKE404]

Medical care levels can definitely vary

The Taxbook does not say much about Nursing Home expense. TB says expense is deductible if principal reason for being there is to get medical care. What person do you know that is in the nursing home that does not receive some form of medial care? I have had people that are in the nursing home that in a short time they will die because of an illness and I have no problem taking the xpense. Them I have people that treat it as a retirement home but they receive medical care.
How do you handle nursing home cost?

Others have already answered this quite well. This is just additional input.

The TB information is, to a large extent, stating exactly what the IRS regs already state. Merely being in a retirement care facility, or even to some extent a nursing home, does not in and of itself constitute medical care. Obviously people in such facilities do incur some demonstrable "medical" costs. From experience, it is common practice for those facilities to provide a statement re "fixed" or "percentage" medical costs.

There are also facilities that provide a broad spectrum of services, from a mere retirement community (independent living) to various levels of care to full time, even hospice care. Members of those communities may easily be advanced from one level to another as circumstances dictate.

For people in dedicated "assisted living" facilities, it is not uncommon for ALL of those costs to be considered as medical due to the high level of care and the condition of the resident. The ADL failure rate (eating/dressing/toileting/transferring) is usually quite high. We are talking about people with debilitating physical and/or mental conditions, over and above just "being old."

It has been my (tax) experience that the facilities where the costs are all or mostly "medical" WILL provide an annual statement of such to the resident. The absence of such a statement is a fairly good indication the living expenses merely fall into the "personal" category.

FE

[S T]

All good information that others have posted
A topic that has been on the Board in the past - try a search for Nursing Care, Assisted Living, Alzheimers or Dementia also for past Board Discussions

If the client has the inability to perform at least two daily living activities without substantial assistance from another individual for at least 90 days.

Here is a a copy of a private letter ruling

IRS Private Letter Ruling - Tax Deductions of Assisted Living Meals and LodgingPosted in [Taxation] A private letter from the Internal Revenue Service explains that meals and lodging costs for an assisted living stay may be deducted as medical expenses if the individual is in the facility for qualifying medical reasons. The letter explains the types of conditions that would meet the standards in order to qualify these costs as tax deductible.
Below is a copy of the IRS private letter dated December 18, 2008:
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C.20224
Number: INFO 2009-0010
Release Date: 1/2/2008
UIL: 213.00-00
CONEX-149526-08
The Honorable Edward Markey
Member, U.S. House of Representatives
5 High Street, Suite 101
Medford, MA02155
Dear Congressman Markey:
This letter responds to your inquiry dated December 10, 2008, on behalf of your constituent (name withheld) who asked about the deductibility of expenses paid to care for her mother, who is in an assisted care program because she suffers from Alzheimer's disease.
As a general rule, taxpayers may not deduct personal, family, or living expenses (section 262(a) of the Internal Revenue Code (the Code)). However, an exception allows taxpayers to deduct expenses that they pay for medical care of the taxpayer, the taxpayer's spouse, or the taxpayer's dependent, subject to certain limitations, if the expenses are not covered by insurance (section 213(a) of the Code). For purposes of this deduction, medical care expenses include amounts paid for the treatment or mitigation of a mental illness and amounts paid for qualified long-term care services (section 213(d)(1) of the Code).
Qualified long-term care services are certain services that a chronically ill individual requires, and that a licensed health care practitioner prescribes under a plan of care (section 7702B(c)(1) of the Code). An individual is chronically ill if the individual meets one of the two "triggers." The first trigger is the inability to perform at least two daily living activities without substantial assistance from another individual for at least 90 days. Daily living activities include eating, toileting, transferring, bathing, dressing, and continence (section 7702B(c)(2)(B) of the Code). The second trigger is a severe cognitive impairment that requires substantial supervision to protect the individual from threats to health and safety (section 7702B(c)(2)(A) of the Code).
What level of assistance with daily living activities is required to meet the first of the two triggers - the inability to perform at least two daily living activities without substantial assistance from another individual. In Notice 97-31, 1997-1 C.B. 417, we define "substantial assistance" as either "hands-on assistance" or "standby assistance."
Hands-on assistance means the physical assistance of another person without which the individual could not perform the activity. Standby assistance means the presence of another person within arm's reach of the individual that is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the activity (such as being ready to catch the individual if the individuals falls out of the bathtub or shower as part of bathing, or being ready to remove food from the individual's throat if the individual chokes while eating).
Notice 97-31 also provides guidance about the second trigger - a severe cognitive impairment that requires substantial supervision to protect the individual from threats to health and safety. The notice defines a "severe cognitive impairment" as a loss or deterioration in intellectual capacity that is comparable to (and includes) Alzheimer's disease and similar forms of irreversible dementia, and is measured by clinical evidence and standardized tests that reliably measure impairment in the individual's:
Short-term or long-term memory,
Orientation as to people, please or time, and
Deductive or abstract reasoning.
"Substantial supervision" means continual supervision (which may include cuing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired individual from threats to his or her health or safety (such as may result from wandering).
The individual also asked whether meals provided with long-term care services are deductible medical care expenses. If an individual is in a hospital or another institution because of a mental illness, the meals and lodging furnished as a necessary incident to medical care are considered medical care expenses (section 1.213-1(e)(1)(v) of the Income Tax Regulations (the Regulations)). This regulation applies to individuals who must be in the facility because of a mental illness that makes it unsafe for them to be left alone (section 1.213-1(e)(1)(v)(a) of the regulations).
However, if the principal reason for being in the facility is based on personal or family considerations, rather than the need for medical care, the cost of the meals and lodging is not a medical care expense. Only the cost of the medical care itself would be deductible (section 1.213-1(e)(1)(v)(b) of the regulations). Thus, expenses for meals and lodging that are non-deductible personal expenses at the onset of a mental illness may be deductible medical expenses after the illness has progressed. For example, expenses for meals and lodging at a minimal-care assisted living facility are non-deductible personal expenses. However, expenses for meals and lodging in a constant-care nursing home may be deductible medical care expenses if the meals and lodging are furnished as a necessary incident to medical care.
Sincerely,
Kimberly L. Koch
Senior Technician Reviewer, Branch 2
(Income Tax & Accounting)