Amount of Mom's Assisted Living Expenses that are Tax Deductible

The guidelines are in IRS Publication 502. With the proper documentation it's likely that all her expenses other than amenities, e.g., hairdressing, cable, etc., will qualify as deductible medical expenses.

The facility should be able to give you a breakdown for medically necessary expenses versus general living expenses. I'd start with them. Keep up posted and maybe we can help futher.

Good luck, Gene E. Utterback, EA, RFC, ABA

In a prior life, I was a volunteer Ombudsman for Elder Care in California. Having a tax background, I was asked this question numerous times, usually by a child of the elder resident.

There are generally three types of living facilities for the elderly. Independent living, assisted living (ALF) and skilled nursing facilities (SNF, pronounced sniff). Skilled nursing facilities are almost always medical facilities and residents are there primarily for medical care either because they are chronically ill (unable to perform at least two activities of daily living (ADLs) without substantial assistance from another individual for at least 90 days due to a loss of functional capacity), or they require substantial supervision to be protected from threats to health and safety due to severe cognitive impairment or they are recuperating and/or receiving rehab for a recent illness or surgery. Therefore, I can say without almost any equivocation, that all expenses incurred in a SNF are deductible as long as the Is are dotted and the Ts crossed. Namely, there is physician certification and a written plan of care.

It is the ALF that almost always presents the problem. That's because they all don't charge and bill the same way and it is not always clear as to what is the primary purpose for residing at the ALF. In addition, ALFs tend to be reluctant to give up the revenue when a resident has to move to a SNF. Many of them will try almost anything to keep the resident. Many of them provide various levels of additional care and services that allow them to keep the resident. In most cases this is within the licensing laws of the state. In some cases I and other volunteers would find the facility in violation because it became obvious that the resident required either substantial supervision to protect themselves or other residents or was so chronically ill that a

The law allows for medical deductions when one is resident in an ALF and the primary reason for being there is medical care (hard to prove because ALFs are not medical facilities) or the resident is receiving nursing services or long-term care services certified by a physician and a written plan of care exists. Nursing services are deductible. If the person meets the definition of being chronically ill (see Pub 502 for definition) or requires substantial supervision, etc. etc, then the whole cost of the ALF would be deductible. What one often finds is that the resident is paying for the nursing and or medical services by contracting for tiered levels of care over and above the monthly rent. It is the cost of the tiered services that then becomes deductible. In certain circumstances, the ALF does not provide identifiable tiered services. They may provide multiple offerings. Each offering includes the rent and some level of service. In this case, it is the ALF that has to break out how much of the cost is a deductible medical expense. Note, if the resident falls into the long-term care services criteria, then you must have physician certification and a written plan of care.

As an Ombudsman, one of things we always looked for in SNFs was the written plan of care. It was a legal requirement for SNFs. It is not a legal requirement for ALFs as they are not medical facilities. You need a written plan of care to meet the deductible medical expense test for long-term care services.

Hope this helps you.

If there is no breakdown, will the IRS accept an estimate, based on some reasonable method (like comparables?)

Steve

OP leads me to believe that she is a "chronically ill individual" (see definition in IRS Pub 502); and also is likely to have "Severe Cognitive Impairment", either of which would qualify

Steve Pope wrote: [snip]

I've never experienced an ALF that would not provide an estimate of how much of the monthly charge represented medical care.

As to your direct question: I don't know what the IRS would find acceptable in an audit. What I do know, is that the burden is on the resident or the resident's representative to show that they were under a doctor's care, that there was a plan of care and that the ALF provided that care.