How to Record Tax Deductions for My Mother's Nursing Home Expenses

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Traditional Medicare Parts A and B don't cover the cost of long-term care, and Medicare managed-care plans (Part C) offer only limited support when it comes to extended care. For instance, the latter might limit its coverage to a weekly visit to an adult day program. Consequently, most long-term support and service costs are paid by a senior's family.

Your mother may be one of the lucky ones with additional medical insurance that significantly reduces the medical charges with which a patient's family must deal long after the parent's illness subsides, but it's likely that you'll still have to shoulder some out-of-pocket expenses.

To make matters worse, you can't assume that you can write off all of the unexpected and unavoidable out-of-pocket expense for your mother's medical care on your tax return. As a taxpayer in 2020, your deduction is limited to medical expenses that exceed ​7.5 percent​ of your adjusted gross income.

Medicare and Nursing Home Expenses

Under some circumstances, Medicare Part A does cover a short-term stay in a skilled nursing facility such as a nursing home. For instance, your mother's doctor might prescribe a stay in a nursing facility to facilitate her recovery from a stroke or a serious injury.

In this case, the original Medicare plan (Medicare Parts A and B) pays a portion of the skilled nursing facility costs for as many as ​100 days​. The Medicare program stipulates, however, that a doctor admit the patient to the facility within 30 days following a hospital stay. In addition, the origin of the admission must be the same illness, injury or condition that led to the original hospital stay.

In this case, your mother's portion of the costs should be totaled and considered when you calculate your medical expenses as you complete your tax return.

Long-Term Care Expenses

Assuming your mother's long-term care costs meet Internal Revenue Service (IRS) requirements, you can deduct nursing home expenses as medical expenses. Valid long-term care expenses include in-home, assisted living and nursing home expenses.

For a nursing home expense to be a deductible one, the care that the facility provides must be necessary in a medical sense and a doctor must prescribe it. The 2019 version of the IRS Publication 502 states the services a nursing facility provides must be preventive, therapeutic, treatment or rehabilitative in nature.

The cost of your mother's meals and lodging while at a nursing home or assisted-living facility are also deductible, assuming that the origin of the expense is the patient's placement in the facility to obtain qualified medical care.

Prescribed Care Plan

A nursing home or long-term care expense is deductible as long as the care that's provided is prescribed by a licensed health care professional to treat a chronically ill patient. Your mother is considered chronically ill if her condition prevents the performance of ​two or more​ normal activities of daily living – eating, bathing or dressing – for ​90 days or more​. Also, a cognitive impairment, such as dementia, meets this requirement if the condition requires supervision of the patient to ensure the person's health and safety.

Insurance Premium Expense

The IRS allows you to claim an itemized deduction for long-term insurance premiums you pay on your mother's behalf. Premiums that, in combination with your other medical expenses, exceed a 7.5 percent​ threshold are deductible.

For the long-term care insurance premiums to be deductible, the policy must be dedicated to the provision of long-term medical care for your mother. This means that the policy premiums for a traditional long-term care insurance policy are deductible, while the premiums for a policy that offers life insurance in addition to long-term care benefits are not. Also, your mother's Medicare co-pays are deductible.

The IRS caps the medical deduction on a tax return based on age. For example, if your mother is age 61 to 70, you can deduct ​up to $4,220, but when she reaches age 71 and over, you can deduct ​up to $5,270​. This is because a person's medical expenses are likely to rise as they age.

Rule on Itemized Deductions

The IRS will allow you to itemize expenses for your mother's nursing home care only if the dollar value of your total medical expenses is greater than 7.5 percent of your adjusted gross income. So, the total medical expenses you can deduct is the difference between the total of your itemized medical expenses and the standard deduction.