October 4, 2016
While it is generally understood that a stay at a skilled nursing facility or nursing home could be tax deductible because they primarily offer medical care, assisted living is often wrongly overlooked. It is true that assisted living operates on a social rather than a medical model, however the personal care assistance and related services that are offered can be deemed medically necessary which could qualify some or all of the expenditure as a tax deduction.
There are two things that need to happen before the fees associated with assisted living can be considered as a tax deduction.
- A physician must determine that assisted living services are medically necessary. This needs to happen annually, so every year the assisted living resident should visit their primary care physician and their doctor will need to determine that the services provided are required. Effectively this means that the resident would need assistance with at least two activities of daily living such as showering, functional mobility, or dressing, or that they are in need of constant oversight because of cognitive impairment such as Alzheimer’s or dementia.
- Any services need to be provided to the resident pursuant to a care plan. In assisted living communities, a care plan is created and updated twice a year by the community’s registered nurse or resident care director. This plan, commonly called an Individualized Service Plan, details which services will be provided, how often they will be provided and by whom. This plan must be signed off on by the resident and the care director at the community.
If the resident’s primary care physician determines that the services provided by the assisted living community are indeed medically necessary and there is a signed, updated and valid service plan in place then the some or all of the costs of assisted living may be deductible to the taxpayer. In order to deduct the costs the taxpayer must be qualified to itemize their deductions.
If you have broad questions about assisted living, or paying for assisted living, I am happy to help! Email me at bpatras at cornerstonemilford dot com. For the ultimate in tax advice, specific questions related to your own personal situation should be discussed with a professional tax preparer or financial planner.
Beth Patras is the Director Community Relations at Cornerstone at Milford, Assisted Living and Compass Memory Support Community. Contact Beth at 508-473-0035 and learn more about Cornerstone at Milford at CornerstoneMilford.com