Assisted Living Tax Deduction

[AndrewK333106]

Hi: My Mom moved into an assisted living facility last May. Does anyone have any information on estimating the amount of "medical expenses" one can deduct from income taxes for assisted living costs? All the information online I've seen say something like "part or all of your assisted living costs may qualify for the medical expense tax deduction". 

When I asked the business director at the assisted living facility, they sent me a 2-page boilerplate document that said  "For residents requiring assistance with 2 or more activities of daily living in our Life Guidance Program, 100% of the fees paid ... could likely[my emphasis] be deductible for tax purposes."

My Mom does meet that requirement, and is paying a monthly supplement for an enhanced plan-of-care above the basic monthly cost for the apartment (the basic rent includes meals, cleaning, laundry, 24-hr access to medical staff, prescription management, free transportation to medical offices, etc..). 

They referred me to IRS Publication 502 "Medical and Dental Expenses", but it is not clear what qualifies in her situation. Under "Nursing Home" the IRS says:

You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care.

Don't include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care. [my emphasis]

That last paragraph would seem to indicate that you can't deduct 100% of the assisted living costs, but the percentage of those costs related to the provision of medical care and services would be deductible? If so, can I press the assisted living facility to provide an estimate of what percentage could be claimed for medical expenses? Or is there a commonly used estimate? 

[GailL1 · Accepted solution]

@AndrewK333106 

The way it goes -

You have that flat rate that covers room & board - meals, laundry, housekeeping, etc.

That is NOT deductible because there is nothing medically oriented about these types of expenses 

What is deductible is any cost over the flat rate that has to do with items of daily living - feed or help with feeding, give or help with bath, change or help with bathroom, etc.  The activities of daily living (ADLs) are the essential tasks people must be able to perform to care for themselves every day. They are dressing, bathing, toileting, eating, continence, and transferring (getting out of bed, into a car, etc.).  Some residents in Assisted Living can do all of them or many of them thus their charge is mostly for room and board.

Assisted living cost that are over the flat rate are measured in a scale of ADL needs - going up in cost the more help or assistance which is needed - when full / complete help is needed - they aren't really eligible for "Assisted" Living and have to move to a facility of total care.

The reason the IRS description rule is like it is, is because they are including all kinds of different types of residences and care sites.  From assisted living / personal care to a nursing home.  You have to distinguish between what is just a residence (room & board) to what is ADL care (Adult Daily Living).

The Assisted Living facility should itemize these separately from room and board or they give you the room and board amount and the level of care of the ADL.  All you are looking for is their price schedule for ADL.

Anything that is actually medical in nature is either paid completely by insurance or is included as medical care and the % that can be deductible on Schedule A.

[KathlinS51912]

I am facing same thing now, for my mom, who is in an assisted living facility with a high level of licensure. Her accountant says the entire amount, including room and board, is deductible, and that judgment seems to be supported by IRS publication 502. Mom is considered a chronically ill person because she is unable to do most of the ADLs, and the principal reason for her being in the facility is to get medical care. 

[GailL1]

@KathlinS51912 

The rationale goes to their reason for being there since the IRS covers it all under some conditions and only some under other conditions.

However, the definition of an “Assisted Living Facility” does not seem to support the medical reasoning for being there. But there could be some charges that would be linked to medical - like changing a colostomy bag - but then there would be the cost of medical supplies linked to this higher level of care.

  From Publ 502 

You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care.

Don't include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care.

  What the IRS would look for is an invoice that shows some skilled nursing care.  They would look for a correlated medical billing.  

If the billing shows charges for room and board + a level of ADL care - but no further mention of any medical care then that would not be deducted as medical.

So what are you considering to be “the principal reason for her being in the facility is to get medical care ” ??  

[KathlinS51912]

Thanks so much, Gail, for this clarification. Mom does, in fact, require skilled nursing care a few times a week for urostomy bag changes and wound care/monitoring, since she is wheelchair bound after hip fracture. There are medical supply invoices and doctors orders to support all of this.  In addition, she cannot do five of the six ADLs on her own—that seems to come under Maintenance and Personal Care Services heading of Qualified Long-Term Care Services. She actually moved from an SNF in another state two months ago to be closer to us, and I was glad to find an assisted living facility that had a high enough level of licensure to fulfill the needs that were being met in the SNF.

[GailL1]

So you see you have justified a lot of her cost but maybe not all of it   Keep those invoices as documentation.  

I hope her prognosis is good and if she recuperates from the hip injury she is able to do more.  

Make sure you also keep that licensing level of care because I am not sure the ALF would meet the definition of a Qualified LTC facilities which normally means a Skilled Nursing Facility but in your case with the added level of care at the ALF you should be fine.

With the IRS sometimes you just have to make a call and have all the backup info material ready if it get questioned and then it could go either way - just know what you are doing.  I have always found that to be the case.

[KathlinS51912]

Many thanks, Gail!

[AndrewK333106]

If it's not one thing it's another! --Thanks Gail...that's what I suspected but was hoping to deduct more 😞