Deducting all of assisted living costs?

[Banjer]

Taxpayer (in California), nearing 100 years old, entered an assisted living facility last year after a diagnosis of cognitive impairment and advice from her physician that she could not live by herself any more. The cognitive problems are why she is in assisted living. I believe she qualifies as "chronically ill."

I hope to learn what documentation I need, and what questions I need to ask (of the facility or her physician), to maximize the allowable deduction for her long-term care expenses. Long-term care insurance pays for a portion of the costs (we have a 1099-LTC form) but her costs exceed that by quite a bit..

1. We have a copy of her "Individual Service Plan" prepared last year by the Care Manager of the facility. It notes among other things that that her physician has ordered that "resident may NOT leave the community unattended." The Service Plan describes various ways that she will be monitored during the day. It describes her as "non-ambulatory per California regulations."

2. Her level of care is NOT currently "memory care". It is regular assisted living room/board/housekeeping with additional charges for medication management (she needs help remembering to take prescription medications). Also, some extra monthly charges for processing her LTC insurance forms, and for an emergency pendant.

I have read that one can in certain circumstances justify deducting all costs (in excess of insurance payments and 7.5% of income rule) if one checks certain boxes. Is that likely in my case? One of the criteria is that her care is "Provided pursuant to a plan of care prescribed by a licensed health care provider." Does the plan of care prepared by the Care Manager count? What do I need to ask?

[Bsch4477]

From your post it looks like all of her unreimbursed expenses at the facility are deductible as a medical expense subject to the 7.5 percent limitation you referenced. No documentation is required with your return but would be necessary if audited.  

[Bsch4477]

Depends. If she is in skilled nursing care all expenses are deductible. If not, only the portion attributed to medical care can be deducted (All subject to the 7.5 percent limitation).  The facility would be very knowledgeable about this since it deals with it routinely. Most can separate the medical care portion if appropriate. 

[Banjer]

Thank you for your response. In the current case the taxpayer is in an assisted living facility after her doctor said that she cannot live independently due to cognitive decline, and the staff help her navigate issues related to this decline (managing medications, charging and wearing her hearing aids, reminding her to eat, and such). But she is not yet in a "memory care" unit. So, I am still a little uncertain of what can be deducted.

[Bsch4477]

Deduct those costs involved in her medical care. Ask the facility if they have such a break down. Often the initial cost of moving into the facility includes a medical cost so ask about that as well.