Category: Retirement Planning, Individual Tax Planning
Posted: March 2019
Nursing-home care can be very expensive. As a result, insurance for such care is growing in popularity. Fortunately, there is some tax relief for these expenses. Both the cost of qualified long-term care and insurance coverage for such care qualify as deductible medical expenses.
“Qualified long-term care” services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal-care services required by a chronically ill individual. To qualify as chronically ill, an individual must be certified by a physician or other licensed health-care practitioner as unable to perform, without substantial assistance, at least two activities of daily living for at least 90 days due to a loss of functional capacity, or due to severe cognitive impairment (memory loss, disorientation, etc.). Of course, a person with Alzheimer's disease qualifies.
“Qualified long-term care insurance” is insurance that covers only qualified long-term care services, doesn’t pay costs that are covered by Medicare, is guaranteed renewable, and doesn’t have a cash surrender value. A policy isn’t disqualified merely because it pays benefits on a per diem or other periodic basis without regard to expenses incurred.
Not all taxpayers will be able to deduct the costs of qualified long-term care or insurance for such care. This is because medical expenses are deductible only to the extent they exceed 10% of your adjusted gross income (AGI) for tax years after 2018, or 7.5% if the individual attained the age of 65 for years beginning before 2017.
Please contact us if you want to learn more about how medical expenses and long-term care may affect your taxes.
Mierendorf & CO. P.C. / email@example.com
4639 West River Dr. | Comstock Park, MI 49321
P 616.784.4445 | F 616.726.6526
ALL RIGHTS RESERVED
2018 © MIERENDORF CPAS