When facing the rising costs of long-term care, many families wonder how much financial relief is available through tax deductions. One common question is: can you deduct assisted living costs as medical expenses? The answer is—it depends. The IRS does allow certain assisted living expenses to be written off, but only under specific conditions. Understanding those requirements can help you make more informed decisions and potentially save thousands of dollars.
Understanding the IRS Definition of Medical Expenses
The IRS defines medical expenses as the costs of diagnosis, cure, mitigation, treatment, or prevention of disease. This includes the cost of services affecting any part of the body and the cost of equipment, supplies, and diagnostic devices. In the case of assisted living, not all costs qualify, only those tied directly to medical care do.
For example, if a resident is in an assisted living facility primarily to receive medical care (such as help with daily living tasks due to Alzheimer’s disease or mobility challenges), then those costs might meet the IRS’s criteria for medical expense deductions. Conversely, if a resident is there for convenience or lifestyle reasons, the IRS may not consider those costs deductible.
When Assisted Living Becomes Deductible
To deduct assisted living costs as medical expenses, two conditions typically need to be met. First, a licensed health care provider must certify that the resident is chronically ill. This means the individual either cannot perform at least two activities of daily living, like bathing, eating, or dressing, without help, or requires substantial supervision due to cognitive impairment.
Second, the care must be provided under a plan of care created by a licensed healthcare practitioner. This includes services like medication management, physical therapy, and assistance with daily living activities, all of which may fall under the deductible umbrella.
When both conditions are met, the IRS generally allows families to deduct assisted living costs as medical expenses, though only the portion of the cost related to medical care. Room and board may also be included if the primary reason for residency is medical.
What Families Should Know Before Filing
Before claiming any deduction, it’s essential to keep detailed records. That includes documentation of the diagnosis, the care plan, and a breakdown of the assisted living facility’s costs, specifying what portion is allocated to medical care. Facilities often provide year-end statements that categorize these expenses, which can be helpful when filing your taxes or working with a tax preparer.
Keep in mind that medical expenses are only deductible to the extent that they exceed 7.5% of tax year’s adjusted gross income (AGI). This means your total qualifying medical expenses must surpass that threshold before you can claim any deduction.
Why It Matters
Being able to deduct assisted living costs as medical expenses can ease the financial pressure for families already carrying a heavy emotional and caregiving load. With care costs easily reaching thousands of dollars per month, even a partial deduction can make a meaningful difference come tax time.
If you’re considering this deduction, consulting with an elder law attorney who understands the complexities of long-term care expenses is a smart choice. They can help you interpret IRS rules, complete the necessary documentation, and make sure you’re maximizing your available deductions legally and accurately.
How Rothkoff Law Group Can Help
As families plan for long-term care, understanding how to deduct assisted living costs as medical expenses offers a valuable layer of financial relief. While not every expense will qualify, the right combination of medical necessity and documentation can open the door to important tax savings. With careful planning and professional guidance, this often-overlooked deduction can offer real support when it’s needed most.
If you’re exploring how to deduct assisted living costs as medical expenses, Rothkoff Law Group is here to guide you. With decades of experience in elder law, life care planning, and long-term care advocacy, our team helps families understand their options and protect their financial well-being. Whether you’re planning for yourself or a loved one, we provide compassionate, knowledgeable support every step of the way. Contact Rothkoff Law Group to learn how we can assist you in navigating care decisions and maximizing available deductions, including how to legally deduct assisted living costs as medical expenses.