Senior care facilities can offer safe, compassionate living for people needing daily support. If you or someone you love are in an assisted living community, there can be many potential costs including food, lodging, and medical care.
Thankfully, there are potential tax and Medicare benefits for assisted living residents, but how do you know who is eligible and what is included? Consider this your guide to understanding these benefits and how they may apply to your unique situation.
Tax Benefits
Different tax deductions depend on your unique situation, and you can potentially have all of your or a family member’s living expenses covered. The deductible expenses depend on several conditions.
For Assisted Living Residents
The Health Insurance Portability and Accountability Act ensures long-term care services may be tax deductible if they qualify. These expenses must be itemized and unreimbursed, such as the activities of daily living, household cleaning, and meal preparation among others.
An assisted-living resident can only claim these deductions if they are certified as unable to perform at least two daily living activities. Examples of these can include:
- Personal hygiene
- Continence management
- Dressing
- Feeding
- Ambulating
Care services must also follow a recommended plan from a licensed healthcare provider for tax deductibility. Many assisted living communities have licensed nurses and social workers to provide this. The plan must outline a daily care routine the taxpayer requires and include how this routine helps their condition.
For Caregivers
There are tax deductions available for caregivers paying for a senior family member’s medical expenses out-of-pocket. The caregiver has to be able to claim their family member as a dependant and be paying a minimum of 50% of their living expenses. If you meet these requirements, you can deduct medical expenses exceeding 7.5% of your adjusted gross income.
A dependent can be a qualifying relative which includes sons, daughters, stepchildren, foster child, or a descendant of them (grandchildren for example). They can also be a brother, sister, half-sibling, or a child of any of them. Other potential qualifying relatives include:
- Parents
- Grandparents
- Aunts & uncles
- Step-parents & siblings
Any other person (other than your spouse) who lived with you all year as a member of your household can qualify as a relative as long as your relationship didn’t violate local law.
In Summary
Assisted living can be tax-deductible if you or your loved one qualifies. The amount of expenses covered is typically defined by the reason someone is in an assisted living community.
If you, your spouse, or your dependent is in assisted living for a medical reason, the entire housing cost (meals, lodging, medical care) is deductible. This qualifies as a medical expense.
If you or a loved one are in assisted living primarily for a non-medical reason, only the cost of actual medical care is deductible as an expense. The cost of meals and lodging do not apply in this scenario.
Tax deductions aren’t the only possible benefits for someone in assisted living. If these possible tax deductions don’t apply to you, or you’re wanting to learn about other options, Medicare and Medicaid have possible benefits for you or your loved one.
Medicare
Medicare is national health insurance for Americans 65 and older. It is government-funded and covers a variety of different services. Medicare is split into three main categories:
- Medicare Part A
- Medicare Part B
- Medicare Part D
Medicare Part A (hospital insurance)
Medicare in this category covers inpatient hospital care, hospice care, and home health care. It also covers nursing facility care and nursing home care.
Medicare Part B (medical insurance)
This type of Medicare covers clinical research, ambulance services, and durable medical equipment. This Medicare includes mental health and limited outpatient prescription changes as well.
Medicare Part D (prescription drug coverage)
This Medicare covers the cost of prescription drugs as well as many recommended shots and vaccinations.
Medicare & Assisted Living
Unfortunately, Medicare does not cover long-term assisted living. Medicare can help cover short-term stays at a senior living home after hospitalization or help pay for rehab and home therapy when prescribed by a doctor. This program does not cover:
- Assisted living
- Long-term care
- Residential care homes
If you’re looking for financial support for assisted living, Medicaid can potentially support you and your loved one.
Medicaid
Medicaid is an assistance program for low-income people of all ages. It is funded by the government and state, so guidelines can vary depending on your place of residence.
The qualifications for each person vary with Medicaid, so it is important to determine your potential coverage. Your loved one may be eligible for Medicaid if they have a low income and few assets besides their current home.
Almost all state Medicaid programs can cover some assisted living costs for eligible residents. This program does not pay for the cost of living in an assisted living community. Medicaid does not pay for the following assisted living services:
- Nursing care
- Case management
- Medication management
- Assessments
- Medical examinations
There are potential tax, Medicare, and Medicaid benefits for you or your loved one to pursue if needed. No matter who needs assisted living support, they deserve a safe and compassionate community, and planning for the future can help ensure this.
Plan for the Future
If you’re interested in assisted living for you, your spouse, or a family member, identify your current financial situation to determine your eligibility for any potential support you may need. If you have any questions regarding a community and the services they provide, contact an expert for assistance.
