Did You Know? Dementia Care Costs May Be Tax-Deductible

Hello everyone,

I'm checking in again because I continue to get some great information passed along to me that can likely help a large segment of my clientele. Today, I'm going to put you on notice of something I'd never heard of until now. Namely, a provision in the tax code ("Long Term Care with Dementia or Alzimere Under IRS Section 213(d)") that allows a medical expense deduction if a client meets a specific criteria for "qualified long-term care services." Now, your CPA is going to hate me for putting you on to this provision because it's something he or she would need to handle for you. But, for those of you watching a client's estate dwindle as it's used to cover the costs of long term care, there's a large tax deduction benefit that might be able to help pay those bills. See below and consider reaching out to the CPA handling your loved one's care to see whether you can benefit. Tax season is upon us and so your CPA may not instantly have time to dig into this, but I'm already hearing about some clients receiving large refunds for the expenses related to their ongoing care so it's worth taking a look. Here are the basics:

To be eligible, the individual with dementia must be certified by a licensed healthcare practitioner as "chronically ill," meaning they require substantial supervision to be protected from threats to health and safety due to the cognitive impairment, and the care must be provided under a written plan of care. 

Eligible Expenses

Once the individual is certified as chronically ill and has a prescribed plan of care, the following expenses may be deductible: 

• Long-Term Care Facility Costs: The entire cost of a nursing home, memory care unit, or similar institution may be included as a medical expense if the principal reason for being there is medical care. If the individual is in the facility primarily for personal reasons, only the portion of the cost attributable to medical or nursing care is deductible.

• In-Home Care Services: Payments for in-home caregivers, including qualified long-term care services like assistance with activities of daily living (bathing, dressing, eating, transferring, toileting, and continence), are deductible.

• Medical Services & Supplies:

  • Fees for physicians, registered nurses, practical nurses, and other medical practitioners.

  • Prescription medicines and some medical supplies.

  • Therapies recommended by a healthcare professional (e.g., physical, occupational, or speech therapy).

  • Equipment and diagnostic devices needed for medical purposes (e.g., a wheelchair or other therapy equipment).

• Meals and Lodging: If the individual resides in a facility primarily for medical care, the costs of meals and lodging within that facility are also deductible.

I hope this helps some of you and don't hesitate to reach out with any questions.

Jason Ebert