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Adult Family Homes vs. Nursing homes


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#1 Karen Lee

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Posted 02 July 2007 - 06:43 PM

:blink: I am reasonably sure that Adult Family Home costs are not deductible as medical costs. However skilled nursing home costs are deductible for the medically necessary portion of the costs. BUT...if a doctor tells you that your spouse requires 24/7 care because of dementia and you are not physically able to give 24/7 care...could this be considered medically necessary and deductible if spouse is placed in an Adult Family Home?

Has anyone had any experience with this situation? Please tell me your experience.
Thanks
Karen

#2 mcb39

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Posted 02 July 2007 - 09:36 PM

Karen, are you referring to a Group Home or an Assisted Living Facility.? My experience with my Mom was that her doctor said that she could no longer live alone and her moving to assisted living rather than a nursing home was our choice; but it certainly was medically necessary. Aren't long-term care insurance premiums deductible? This issue never came up with us as Mom was not required to file a tax return. However, her care got steadily more extensive to the point of staying in the same facility but entering into hospice care until passing. IMO, if the medically necessary portion is not deductible, it certainly should be. Have no research materials with me; but am certaily interested in what input others may have.

#3 Karen Lee

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Posted 03 July 2007 - 11:19 AM

Karen, are you referring to a Group Home or an Assisted Living Facility.? My experience with my Mom was that her doctor said that she could no longer live alone and her moving to assisted living rather than a nursing home was our choice; but it certainly was medically necessary. Aren't long-term care insurance premiums deductible? This issue never came up with us as Mom was not required to file a tax return. However, her care got steadily more extensive to the point of staying in the same facility but entering into hospice care until passing. IMO, if the medically necessary portion is not deductible, it certainly should be. Have no research materials with me; but am certaily interested in what input others may have.


Adult Family Homes, Assisted Living Homes and Skilled Nursing Homes fall under 3 separate and distinct categories in the State of Washington. Assisted Living falls under Boarding House rules and does not take care of any medical situations other than calling 911, they can do medication delegation with trained staff. Adult Family Homes can do some skilled nursing but more often than not is used for elderly with dementia, nurse on staff and has a 6:1 ratio. Skilled nursing facilities for those persons requiring 24/7 medical attention. I have Grandma (will be 101 this month) in an Adult Family Home at this time. She went from my house to Assisted Living (7 yrs) to hospital to Skilled Nursing to Adult Family Home and the experience at the Nursing Home was not favorable. However Grandma is on Medicaid and there is no problem financially with her.

Then we have my mother who is in an Adult Family Home incapacitated by dementia and stroke. And all on self pay and her estate should be depleted in 3 years. At this time she is pulling out 72G from her IRA plus Social Security to take care of the Adult Family Home. Will be selling her home soon and stop the IRA distributions and live off the proceeds from the house since it will not be taxable income.

Then I have a couple of clients on self pay for spouse and they have asked me about deductibility of some of these costs for Adult Family Homes. I cannot find where AFH costs are deductible since they are basically lodging and meals.

So all opinions are welcome and cites are welcome and experiences are welcome.

#4 kcjenkins

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Posted 03 July 2007 - 01:02 PM

If you can get a doctor to give you a letter stating that 'due to her health needs, she should be in a facility with around the clock care available' or some such wording, then you should be able to deduct part or all of the cost. Most often, the facility itself will have established what portion, under what circumstances, of their fees will qualify, and will give you that information in writing. Medical costs CAN include basic care, they are not just limited to 'medical treatments'. Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Please note that when deducting the cost of hospital care, this includes amounts paid for meals and lodging.

There is a list in Pub 502. Read the section on Lodging and on Nursing Homes. And keep in mind, if the basic reason for the person being in the home is due to a medical condition, which this question was based on, then it probably is deductible. That 'condition' can be mental as well as physical.

#5 MontanaEA

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Posted 03 July 2007 - 01:32 PM

Adult Family Homes, Assisted Living Homes and Skilled Nursing Homes fall under 3 separate and distinct categories in the State of Washington. Assisted Living falls under Boarding House rules and does not take care of any medical situations other than calling 911, they can do medication delegation with trained staff. Adult Family Homes can do some skilled nursing but more often than not is used for elderly with dementia, nurse on staff and has a 6:1 ratio. Skilled nursing facilities for those persons requiring 24/7 medical attention. I have Grandma (will be 101 this month) in an Adult Family Home at this time. She went from my house to Assisted Living (7 yrs) to hospital to Skilled Nursing to Adult Family Home and the experience at the Nursing Home was not favorable. However Grandma is on Medicaid and there is no problem financially with her.

Then we have my mother who is in an Adult Family Home incapacitated by dementia and stroke. And all on self pay and her estate should be depleted in 3 years. At this time she is pulling out 72G from her IRA plus Social Security to take care of the Adult Family Home. Will be selling her home soon and stop the IRA distributions and live off the proceeds from the house since it will not be taxable income.

Then I have a couple of clients on self pay for spouse and they have asked me about deductibility of some of these costs for Adult Family Homes. I cannot find where AFH costs are deductible since they are basically lodging and meals.

So all opinions are welcome and cites are welcome and experiences are welcome.


Here are a couple of useful sources. The first is a good explanation of the documentation needed (health care professional's statement and plan of care):

http://www.alz.org/d...ional/taxes.pdf

The second is a sample heath care professional's statement:

http://www.alznorcal.org/

Edited: The link for the statement doesn't take you directly to the statement, although you can get there by clicking on "caregivers questions" , the "informative articles", then "Taxes and Alzheimers - State". Since it's a little complicated to navigate, I'll cut and paste the statement here:


Sample Certification of Chronically Ill Individual under IRS Code 7702B

TAXES AND ALZHEIMER'S DISEASE

SAMPLE CERTIFICATION OF CHRONICALLY ILL INDIVIDUAL UNDER INTERNAL REVENUE CODE §7702B



The undersigned certifies that he or she is a licensed health care practitioner as defined in IRC §7702B©(4) (that is a physician (as defined in §1861® of the Social Security Act), a registered professional nurse, or a licensed social worker).

The undersigned certifies that ___________________________________ is a chronically ill individual because he or she meets one of the following two tests:

Activities of Daily Living Test. He or she is unable to perform at least two of activities of daily living (ADLs), eating, toileting, transferring, bathing, dressing, and continence, without substantial assistance from another individual and has or will be unable to perform such ADLs without such assistance for a period of at least 90 days due to a loss of functional capacity. I understand that (1) "Substantial assistance" means hands-on assistance and standby assistance; (2) "Hands-on assistance" means the physical assistance of another person without which the individual would be unable to perform the ADL; (3) "Standby assistance" means the presence of another person within arm's reach of the individual that is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the ADL (such as being ready to catch the individual if the individual falls while getting into or out of the bathtub or shower as part of bathing, or being ready to remove food from the individual's throat if the individual chokes while eating).

Cognitive Impairment Test. He or she requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment. I understand that (1) "Severe cognitive impairment" means a loss or deterioration in intellectual capacity that is (a) comparable to (and includes) Alzheimer's disease and similar forms of irreversible dementia, and (B) measured by clinical evidence and standardized tests that reliably measure impairment in the individual's (i) short-term or long-term memory, (ii) orientation as to people, places, or time, and (iii) deductive or abstract reasoning, and that (2) "Substantial supervision" means continual supervision (which may include cuing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired individual from threats to his or her health or safety (such as may result from wandering).



________________________________
Signature




________________
Date



________________________________
Title




This sample certification is based on IRC §7702B, Notice 97-31, 1997-1 C.B. 417, the Conference Committee Report on the Health Insurance Portability and Accountability Act, P.L. 104-191, and the General Explanation (Bluebook) of Tax Legislation Enacted in the 104th Congress (1996).

#6 kcjenkins

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Posted 03 July 2007 - 01:44 PM

An excellent and valuable post, Montana. Thanks for sharing that with us all. I'm going to save that one, for sure.

#7 Karen Lee

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Posted 03 July 2007 - 03:59 PM

Thank you all for this very valuable information. I knew I could count on you. I think I have enough info to go forward with more research for these individuals including my own family. Thanks again.
Karen




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