5 Tips on Assisted Living Tax Deductions

seniors live fulfilling life
4 Signs It’s Time for a Retirement Community
January 21, 2024
senior living search variables
5 Facts on Medicare and Assisted Living
March 20, 2024
Show all

5 Tips on Assisted Living Tax Deductions

comparing assisted independent living

There are several common questions that often arise regarding financial areas when you or someone in your family is considering a move to an assisted living facility, and one of the most frequent is this: Is assisted living tax deductible? The answer is often yes, though there are some important nuances to be aware of. 

At Cozy Retire, we’re proud to offer caring, compassionate assisted living community services across Kaysville, Layton and Ogden, ensuring seniors have fantastic options for any retirement community or similar need they may have. Here are some basics on tax deductibility for assisted living programs, including some of the important nuances to be aware of. 

HIPAA and Long-Term Care Services

One of the most notable pieces of legislature to come out of the assisted living world in recent years is the Health Insurance Portability and Accountability Act (HIPAA) of 1996. This act was intended to help protect sensitive patient data, and it did just that. It may also have an impact on whether or not your assisted living costs are tax deductible.

Under HIPAA, long-term care services may be tax deductible as an unreimbursed medical expense. These are defined as including “personal care services,” such as assistance with bathing, dressing, eating and more. Meal preparation and household cleaning are also included. 

Definitions of “Chronically Ill”

Assisted living residents looking for tax deductions must also qualify as “chronically ill,” which refers to those who are unable to perform two or more activities of daily living without assistance, or who need constant supervision for these actions: Eating, transferring, bathing, dressing and continence. This status must have been certified for at least 12 months. 

Proper Licensure for Practitioner

In addition, all assisted living services utilized for tax deductions must be provided through a properly licensed care provider. This includes physicians, nurses or other qualified health professionals who are responsible for the medical care of the resident. Home healthcare agencies may also qualify if they meet certain requirements. 

Partial or Full Deductions?

In some cases, only a portion of assisted living expenses will be tax deductible. For example, if a resident is chronically ill but also has meals provided as part of their care package, only the medical and personal care service portions will be eligible for deduction.

In other cases, however, the full assisted living expense may be tax deductible. You can also potentially include expenses for travel to and from medical appointments, as well as any necessary modifications made to the resident’s living space. 

Documentation Required

For those looking to claim assisted living deductions on their taxes, proper documentation is crucial. This includes a certification of chronic illness from a licensed healthcare practitioner, as well as itemized statements from the assisted living community detailing the specific expenses incurred. Keep in mind that deductions may also be limited based on a resident’s income and other factors.

At Cozy Retire, we understand the importance of providing quality care that helps seniors thrive. We hope this information has been helpful to you and your family as you navigate the financial aspects of choosing an assisted living community. Our team is always available to answer any additional questions you may have and provide personalized support for your unique situation. Contact us today to learn more about our services and how we can help you find the perfect home for you or your loved one.