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August 4, 2021 By LGH Consulting

5 possible tax aspects of a parent moving into a nursing home

If you have a parent entering a nursing home, you may not be thinking about taxes. But there are a number of possible tax implications. Here are five.

1. Long-term medical care

The costs of qualified long-term care, including nursing home care, are deductible as medical expenses to the extent they, along with other medical expenses, exceed 7.5% of adjusted gross income (AGI).

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 that is provided under care administered by a licensed healthcare practitioner.

To qualify as chronically ill, a physician or other licensed healthcare practitioner must certify an individual as unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for at least 90 days due to a loss of functional capacity or severe cognitive impairment.

2. Long-term care insurance

Premiums paid for a qualified long-term care insurance contract are deductible as medical expenses (subject to limitations explained below) to the extent they, along with other medical expenses, exceed the percentage-of-AGI threshold. A qualified long-term care insurance contract covers only qualified long-term care services, doesn’t pay costs covered by Medicare, is guaranteed renewable and doesn’t have a cash surrender value.

Qualified long-term care premiums are includible as medical expenses up to certain amounts. For individuals over 60 but not over 70 years old, the 2021 limit on deductible long-term care insurance premiums is $4,520, and for those over 70, the 2021 limit is $5,640.

3. Nursing home payments

Amounts paid to a nursing home are deductible as a medical expense if a person is staying at the facility principally for medical, rather than custodial care. If a person isn’t in the nursing home principally to receive medical care, only the portion of the fee that’s allocable to actual medical care qualifies as a deductible expense. But if the individual is chronically ill, all qualified long-term care services, including maintenance or personal care services, are deductible.

If your parent qualifies as your dependent, you can include any medical expenses you incur for your parent along with your own when determining your medical deduction.

4. Head-of-household filing status 

If you aren’t married and you meet certain dependency tests for your parent, you may qualify for head-of-household filing status, which has a higher standard deduction and lower tax rates than single filing status. You may be eligible to file as head of household even if the parent for whom you claim an exemption doesn’t live with you.

5. The sale of your parent’s home. 

If your parent sells his or her home, up to $250,000 of the gain from the sale may be tax-free. In order to qualify for the $250,000 exclusion, the seller must generally have owned the home for at least two years out of the five years before the sale, and used the home as a principal residence for at least two years out of the five years before the sale. However, there’s an exception to the two-out-of-five-year use test if the seller becomes physically or mentally unable to care for him or herself during the five-year period.

These are only some of the tax issues you may deal with when your parent moves into a nursing home. Contact us if you need more information or assistance.

© 2021

Filed Under: News Tagged With: adjusted gross income, AGI, nursing home, parent

September 4, 2020 By LGH Consulting

Caregiver; Signs Your Loved One May Need Assisted Living

Many older adults can benefit from receiving assistance in their daily lives. As a caregiver, you will probably be the first person to notice when your loved one needs more help than you are able to give yourself. Below, learn about some of the most common signs your loved one may benefit from assisted living and discover what types of resources are out there.

Declining Mobility

If your loved one begins having trouble getting around safely, it can be a big red flag. Struggling to get up from a chair, having more frequent falls, or letting housework slip can all be warning signs that your loved one can’t move around as easily as before.

Losing mobility is dangerous because it makes your loved one more prone to injury. But the risks go far beyond that. According to Harvard Health, declining mobility creates a domino effect that impacts seniors’ social lives, mental health, and medical conditions. When seniors lose mobility, they are less likely to leave the house, which can affect their friendships while also triggering loneliness and depression. When mobility issues are serious enough to make a senior fear getting up from their bed or chair, it can even cause infections that lead to incontinence and other serious medical issues.

Trouble Managing Medications

Managing medication is difficult for a number of reasons. Aging care explains that seniors may struggle taking medication due to vision problems, memory loss, or even a lack of income that makes it hard to access the medications they need.

If your loved one frequently forgets to take medication, takes the wrong pills, or doesn’t follow their doctor’s instructions, it can significantly affect their health. When you are unable to be there to remind or assist your loved one, it might be time for assisted living or other services that provide regular care.

Difficulty Cooking

Good nutrition is crucial at every age, but many seniors struggle to eat regularly and prepare healthy meals. Depression, dental issues, trouble swallowing, and a number of other factors can affect your loved one’s diet. And while there are ways to encourage your loved one to eat when you’re around, it’s important that they are eating regularly even during times when you’re not with them.

Caregiver Burnout

As a caregiver, you pour a lot of your time and energy into caring for your loved one. While you want to do everything you can to help, providing assistance can also leave you feeling drained physically and emotionally. This is often referred to as caregiver burnout.

It’s important to pay attention to your loved one’s needs, but it’s never a good sign when you begin neglecting your own needs. If you’re experiencing this, it might indicate that your loved one needs more care than you can provide yourself.

Many caregivers feel guilty when they get overwhelmed, but accepting help is not a sign of failure. There are many senior services to take advantage of in the community, such as home health aides, case management services, and more.

Resources for Helping Your Loved One

There are countless resources available for caregivers trying to help their loved ones lead happier and healthier lives. Assisted living may ultimately be the best solution for your family member, but these resources can also help you take care of your loved one.

How to Talk to Your Parents About Assisted Living

How to Pay for Nursing Home Care

4 New Law Changes That May Affect Your Retirement Plan

10 Exercises to Help Seniors Improve Balance, Mobility, and Fitness

Help Your Senior Get Organized and Remember to Take Medications

What Do You Do When Your Elderly Parent Won’t Eat?

23 Popular Online and In-Person Caregiver Support Groups

Being a caregiver is no easy task, but when it becomes impossible to provide everything your loved one needs, it might be time to consider assisted living. Paying attention to warning signs that your loved one needs a greater level of care is sometimes the best thing you can do to help.

 

Filed Under: News Tagged With: assisted living, caregiver, declining mobility, depression, loneliness, nursing home

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