Pull pre-tax out up to medical expenses even if not needed this tax year?

[mouth]

Edited 26 Nov: lots of updated detailed requested can be found in my update post down thread: viewtopic.php?p=7565718#p7565718

Hi everyone. I don't expect anyone to specifically remember my other posts on the topic, but I'm helping my SO manage her Aunt's finances as she transitioned to assisted living in Oct after living with family. I suspect the answer to my question is going to be, "we need more details to give a real answer," but for now I figure it's easier to get a quick post out and formulate the details only if needed.

Big picture: aunt is living off savings account cash, pension, SS and just moved into assisted living. As you might expect she's had some surging medical expenses this year (three hospital stays so far) and the new assisted living medical component. For 2023 her income subject to taxes are pension ($15.9K) + SS ($25.7K) so ~ $41.6K.

Question: is it worth considering doing some pre-tax distributions in 2023 (above RMDs that have already occurred) to take advantage of 2023 medical expense deductability even if she doesn't need those funds right now? I project her to run out of savings account cash by Q3 2024, so she'll need pre-tax distributions funds no matter what and of course then she'll have even more medical expenses that can be considered for deduction in 2024.

I just feel like we'd be leaving medical deductions on the table in 2023 if we don't take some pre-tax distributions up to a reasonable limit. Or am I missing something?

Thanks in advance

[retired@50]

You can use the "pre-tax" money to replenish the savings account, so yes, I'd look into doing this.

You may also want to read up on the medical deduction rules. My recollection is that any deductible medical expense that exceeds 7.5% of income would be in play. So, using the $41,600 figure you provided, the first $3,120 would be on her, the rest would be deductible.

Check with your tax preparer or model a tax return for the person in question using tax software to be certain.

Regards,

[retiredjg]

Tough to say. Especially since you didn't say what her medical expenses are this year.

1. If she does not take anything out of the IRA, she might be in the 12% tax bracket. However you didn't include the RMD in her income, so this might not be correct. With her RMD, she might already be in the 22% tax bracket.

2. The medical deduction is only available on the part of her medical expenses that exceed 7.5% of her AGI. Once you add the RMD to pension and SS, how much is 7.5% of that?

3. Is #2 higher than her standard deduction? I think her SD is likely to be $15,700 unless she is blind in which case it would be higher.

4. You need to be cognizant of the IRMAA limit so that a distribution from IRA would not push her Medicare costs up in two years.


These are just some factors I thought of to throw into the computation. I'm not sure I've got all the facts right and am looking forward to others' comments.

In the end, I suspect you might have to run side by side tax returns and compare the benefit (or lack thereof) of different IRA distributions. I don't know of any easier way to do this.

[chemocean]

If she starts to take funds out of tax-deferred account, those amounts will also be subjected to the 7.5% of AGI threshold before they become deductible. In addition, to be advantageous, your aunt's medical expenses would need to be high enough that all deductions exceed the standard deduction plus the addition for people over 65 ($15,150 in 2023, I think).

My plan when I begin having high medical expenses is to calculate what amount of medical expenses I would need to have to exceed the standard deduction. Thus, you are not "leaving these medical expenses on the table", because withdrawal from tax-deferred accounts below this amount would not affect the deduction, but would increase taxes.

But money is fungible. If medical expenses are high enough to the extend that itemized deductions exceed the standard deduction, tax liability will decrease the taxes paid on the pension and SS. But the tax savings will probably be at a lower tax rate (or even zero rate) than if you took tax-deferred funds for some or all of the medical expenses.


My plan is to Use taxable income to pay for the expenses below this line, and then withdrawal tax-deferred funds for amounts above this amount. Note that as you take tax-deferred withdrawals, this amount will increase because that withdrawals increase AGI and threshold amount.

[chemocean]

Whoops both of us were off.
The standard deduction for 2023 is 13,850, plus $1500 for over 65 = $15, 350.

[cas]

For 2023 her income subject to taxes are pension ($15.9K) + SS ($25.7K) so ~ $41.6K.


[. . .]Or am I missing something?

Not exactly what you asked, but related...

I think you might need to add in the consideration that the contribution of SS to AGI is weird.

If you mean that her *total* SS income is $25.7K, then the *taxable* portion of her SS in 2023 is only $1875. (The Dinkytown tax estimator listed in the Boglehead's wiki article "Tax Estimation Tools" is a good one for figuring out the taxable component of SS.)

So then that would make her AGI 15.9K + $1875 = 17,775 (which is considerably lower than the $41.6K that I think you are using as AGI in your current planning.)

(Unless you really did mean that the taxable portion of her SS is $25.7K (and the total SS is larger). Or, as retiredjg mentioned, whether there is some additional, unmentioned income in the form of an RMD from the IRA or some such.)

Anyway ... if the *taxable* SS is $1875, then that both
-lowers the "7.5% of AGI" threshold at which medical expense contribution to itemizing deductions starts being non-zero on Schedule A.
-puts her right at the beginning of the "Social Security tax hump"

Add in the effect on "7.5% of AGI" of possible distributions out of an IRA, plus standard-vs-itemized deduction considerations, and that gets to be a lot of non-intuitive moving parts in her tax picture. Sounds like a prime situation for running some scenarios using one or more of the tax estimation tools listed at the wiki link above. (If you have access to Excel, the "Toolbox" one is very powerful for planning. (The "Roth Conversion with Social Security and Medicare IRMAA" tutorial should be relevant to the sort of planning you are thinking of doing, even if you do just a plain IRA distribution instead of a Roth conversion.)

If you don't have access to Excel, the Dinkytown one is pretty good for relatively straightforward income/deduction profiles like you describe the aunt having.

[retiredjg]

Whoops both of us were off.
The standard deduction for 2023 is 13,850, plus $1500 for over 65 = $15, 350.

For a single person, this extra is not half of a couple. I don't know why. It's $1850. For a total of $15,700.

https://www.nerdwallet.com/article/taxe ... -deduction

[retiredjg]

Add in the effect on "7.5% of AGI" of possible distributions out of an IRA, plus standard-vs-itemized deduction considerations, and that gets to be a lot of non-intuitive moving parts in her tax picture.

Agree. There are so many moving and changing parts right at this level of income that some kind of tool or estimator is probably required to get even a decent estimate. I'm not seeing any way around it.

For example, It is possible with the pension and RMD that 50% or even 85% of the SS is taxed even if there is no withdrawal from IRA.

So a first step is to see how much of the SS is taxable. Then go from there.

[RetiredAL]

Hi everyone. I don't expect anyone to specifically remember my other posts on the topic, but I'm helping my SO manage her Aunt's finances as she transitioned to assisted living in Oct after living with family. I suspect the answer to my question is going to be, "we need more details to give a real answer," but for now I figure it's easier to get a quick post out and formulate the details only if needed.

Big picture: aunt is living off savings account cash, pension, SS and just moved into assisted living. As you might expect she's had some surging medical expenses this year (three hospital stays so far) and the new assisted living medical component. For 2023 her income subject to taxes are pension ($15.9K) + SS ($25.7K) so ~ $41.6K.

Question: is it worth considering doing some pre-tax distributions in 2023 (above RMDs that have already occurred) to take advantage of 2023 medical expense deductability even if she doesn't need those funds right now? I project her to run out of savings account cash by Q3 2024, so she'll need pre-tax distributions funds no matter what and of course then she'll have even more medical expenses that can be considered for deduction in 2024.

I just feel like we'd be leaving medical deductions on the table in 2023 if we don't take some pre-tax distributions up to a reasonable limit. Or am I missing something?

Thanks in advance

The first thing you need to determine is her 'assisted' medically needed or not. If medical, a large part and maybe all of the Assisted Living charges may be considered medically necessary expense. Learn about Activities of Daily Living (ADL's). The Assisted Living's Care Plan will give some direction of this, but a Doctor needs to Order It to satisfy the tax man. Your opinion does not count. If medical, then you still have to clear the Std Deduction and 7.5% Medical hurdles.

I went thru similar with my Dad as to whether his Long Term Care payouts would be taxable or not. In my Dad's case, it was not taxable.

[nonnie]

Do note that entrance fees are among the items included in the definition of medical expenses. The assisted living facility should provide residents with information regarding what portion of fees can be attributed to medical costs. Many people, including tax preparers are not familiar with these guidelines.
For someone in AL, it's pretty common they cannot complete two or more ADLs. Post back with more details.

[curmudgeon]

I'll emphasize a bit the IRMAA mention by retiredjg above. There's often a lot of discussion in Roth conversion threads about how using tIRA money when you have high medically required expenses in old age can get that tIRA money out "tax free". And that's true to an extent due to medical expense deductibility, as shown in other responses. The gotcha is that IRMAA (medicare surcharge) is not affected by deductible medical expense; it's based on gross income. Getting hit by part B and part D IRMAA can be an effective added tax of $3-4K per year (or more). Not the end of the world, but an unpleasant surprise if you thought the medical deduction was covering the extra IRA withdrawal.

[grabiner]

Rather than pulling money out of the pre-tax IRA, she could convert some of the traditional IRA to a Roth IRA and get the same benefit of a tax deduction.

Then, with the money in a Roth IRA, she would not have future RMDs on that money during her lifetime, nor owe taxes if she withdraws the money. If she doesn't withdraw it, her heirs would get 10 years of tax-free growth.

[rossington]

Hi everyone. I don't expect anyone to specifically remember my other posts on the topic, but I'm helping my SO manage her Aunt's finances as she transitioned to assisted living in Oct after living with family. I suspect the answer to my question is going to be, "we need more details to give a real answer," but for now I figure it's easier to get a quick post out and formulate the details only if needed.

Big picture: aunt is living off savings account cash, pension, SS and just moved into assisted living. As you might expect she's had some surging medical expenses this year (three hospital stays so far) and the new assisted living medical component. For 2023 her income subject to taxes are pension ($15.9K) + SS ($25.7K) so ~ $41.6K.

Question: is it worth considering doing some pre-tax distributions in 2023 (above RMDs that have already occurred) to take advantage of 2023 medical expense deductability even if she doesn't need those funds right now? I project her to run out of savings account cash by Q3 2024, so she'll need pre-tax distributions funds no matter what and of course then she'll have even more medical expenses that can be considered for deduction in 2024.

I just feel like we'd be leaving medical deductions on the table in 2023 if we don't take some pre-tax distributions up to a reasonable limit. Or am I missing something?

Thanks in advance

Does she have enough in retirement accounts plus any other assets you did not mention to cover the shortfall moving forward?
Please elaborate.

[mouth]

Sorry for the long delay everyone, and THANK YOU for your always helpful comments.

A few things as an update based on your comments, my thinking, and playing with Dinkytown:

- 2023 is out. I don't even have to lookup her RMDs because she won't have enough medical expenses to itemize

- 2024 will for sure exceed the standard deduction

- IRMAA shouldn't be a problem, especially if I DO have her start pulling taxable distributions sooner than later to stretch them out over more years as opposed to waiting for her to run out of post-tax assets and then fully funding her needs with taxable distributions. And honestly probably not even then.

- Roth Conversions wouldn't seem to be advisable since I expect her total assets to be exhausted in 5 years. Yes, at that point she's going to be depending on whatever Medicaid grants she can get coupled with her facility's charitable grants to allow her to stay there until she passes.

The additional details I believe everyone is looking for,
Post Tax Savings: $132k
Pre-Tax IRA Savings: $270k

Total Expenses for 2024: $104k

Income for 2024: $54.0k
- $15.8k of pension (no COLA increase)
- $26.5k of SS (2023 benefit with 3.2% increase and before medicare is taken out)
- $11.7k of RMD based on 76yo and 23.7 distribution period and value of assets today

Medical Expenses for 2024: $33k
(based on 2023 values I expect to remain the same or go up)
- $21k medical care portion of her assisted living facility (Rent is $60k)
- $7k in medicare, supplemental, and dental health insurance (if I'm reading correctly that they are deductible)
- $5k in medications and doctor visits

With just those values entered Dinkytown says
- $11.7k Taxable Distributions
- $15.8k of pension
- $10.3 Taxable SS
- $37.9 Total Income
- $30.1k Itemized deductions
- $7.8k Taxable Income
- $777.50 Total Tax (10% Bracket / 2.05% effective)

Accounting for her income and RMD, she needs an additional $50k to live on in 2024 which her savings can cover. So she doesn't NEED more taxable distributions for 2024.

If she had no post-tax savings she would need an additional $50k of taxable distributions to cover expenses and the result is
- $15.8k of pension
- $61.7k Taxable Distributions
- $22.5k Taxable SS
- $100.1k Total Income
- $25.5k Itemized deductions
- $74.6k Taxable Income
- $11,725 Total Tax (22% Bracket / 11.71 effective)

So that sets a nice upper bound. If I reduced her distributions by $1000 I see her effective marginal rate at the top is 23.1%

I was worried about where her 40.7% "Tax Torpedo" might be since she's riiiight above what the wiki says is the $25,921 SS limit for 2024. But playing around with Dinky town wasn't showing a 40.7% rate anywhere so I suppose her itemized deduction is having an impact. Either way, I saw her shift from an effective ~12.x% marginal rate to a ~23.x% marginal rate at $35k of total taxable distributions; ~$23k more than her RMD. With that, Dinkytown shows,
- $15.8k of pension
- $35k Taxable Distributions
- $22.5k Taxable SS
- $73.4k Total Income
- $27.5k Itemized deductions
- $45.9k Taxable Income
- $5,411 Total Tax (22% Bracket / 7.37 effective rate)

So my best guess with these numbers is that for 2024 she's best off targeting ~35k-40k of total taxable distributions which will cover her RMD, and help smooth out her future year's tax brackets by splitting her living expenses between her pre-/post-tax savings.

I know I'll need to refine this analysis as the year, and each year, progresses and real expenses roll in.

What else am I missing?

[mouth]

As a fun addendum. Now that I've figured out 2023 is a "bust" for itemized deductions, and that her marginal tax rate is low, I get to figure out if it's worth liquidating her annuities and accept the early withdrawal fee for the lower tax rate vs stretching it out using 10%/y penalty free withdrawals coupled with decreasing early withdrawal penalty rate while guessing at the rate of return she's likely to get (peanuts) compared to the 5.x% Schwab Treasury MM is getting (for now at least). Figuring the ROI is going to be annoying because of how opaque the annuity's growth formula is, and frankly I'm inclined to just go for simplicity and the "cover my eyes and throw" approach of assuming 5.x% plus the lowest tax rate she's likely to see is worth the early penalties;.

But that's more a topic for my other thread: viewtopic.php?t=412685

[FiveK]

What else am I missing?

Nothing significant comes to mind. Unless, that is, could she deduct the entire cost of assisted living because her principal reason for being there is to get medical care? Discussion below assumes she can deduct only $21K but obviously deducting the whole $60K would make a big difference.

Yes, the itemization affects the Taxation of Social Security benefits so your calculations won't match the ones there because they all assume the standard deduction.

Also, the 7.5% of AGI floor for itemizing medical expenses means the "usual" marginal rates get multiplied by 1.075.

E.g., while in the "up to 85% of SS benefit" phase-in:
10% * 1.85 * 1.075 = 19.89%
12% * 1.85 * 1.075 = 23.87%
Then after the full 85% of SS is being taxed:
12% * 1.075 = 12.9%
22% * 1.075 = 23.65%
Etc.

Dinkytown's 2023 numbers are fine for rough estimates of 2024 taxes. If you want to use 2024 numbers, a few of the Tax estimation tools covered there do have that option now. The chart generated by the toolbox one for your aunt's situation is below. The starting point is the $54K income that include the RMD, so these are the federal tax rates on the "optional" IRA withdrawals.

[mouth]

What else am I missing?

Nothing significant comes to mind. Unless, that is, could she deduct the entire cost of assisted living because her principal reason for being there is to get medical care?

No I don't believe she would qualify under that language. No medical professional said she needed to be there, she was released from the hospital after her last fall back into the the care of family to live at home. She asked, and family sort of insisted, she be moved because family couldn't care for her anymore due to their own medical issues, and because we just knew it was better for everyone all around. aka "personal".

But ...

Q: Working under the assumption that she entered this Assisted living facility such that her "reason for being in the home is personal" but later on her "principal reason for being there is to get medical care" because her condition has worsened, does that count from that point forward? I assume some form of medical attestation is needed in case of an audit? How would that conversation go with her Dr.?

_ "Hey Doc if she were living alone in a rental apartment right now (the only other viable option now) would you say she'd need to move into a facility like this for medical reasons?"

Discussion below assumes she can deduct only $21K but obviously deducting the whole $60K would make a big difference.

Yes, the itemization affects the Taxation of Social Security benefits so your calculations won't match the ones there because they all assume the standard deduction.

Also, the 7.5% of AGI floor for itemizing medical expenses means the "usual" marginal rates get multiplied by 1.075.

E.g., while in the "up to 85% of SS benefit" phase-in:
10% * 1.85 * 1.075 = 19.89%
12% * 1.85 * 1.075 = 23.87%
Then after the full 85% of SS is being taxed:
12% * 1.075 = 12.9%
22% * 1.075 = 23.65%
Etc.

Dinkytown's 2023 numbers are fine for rough estimates of 2024 taxes. If you want to use 2024 numbers, a few of the Tax estimation tools covered there do have that option now. The chart generated by the toolbox one for your aunt's situation is below. The starting point is the $54K income that include the RMD, so these are the federal tax rates on the "optional" IRA withdrawals.

The Toolbox!!! I knew you all were creating that chart with something found in the wiki but I couldn't track it down.

Thank You! for doing it above and for cluing me into where I could do my own fishing

Yeah that chart makes sense of what I was seeing in Dinkytown as I tweaked the numbers. Obviously so much easier to see in a nice chart. Especially what I missed I guess which is the higher 23.87% marginal rate just before ~$14k of "optional" IRA withdrawals. I guess I just never tested that low. It also validates my rough guess at $24k "optional" IRA withdrawals totaling $35k and that there's nothing to worry about really until that bump at $58k "optional".

In general I feel like what this is all telling me is

1) I should suggest she aim for the end of that 12.9% trough in the marginal rate
2) We won't know where the end of that trough is until late 2024 when we have a better feel for her actual 2024 medical expenses
3) There's no reason to go beyond the end of that trough unless there's a need to cover expenses (read: she's spent down her post-tax funds)

Sound about right?

[nonnie]

The most basic test for tax deductibility and qualification for deduction of the entire rent is ADLs. Can she perform all 6 ADLs every single day or does she need/receive assistance for at least two of them? Note in the description below that "stand by assistance" counts. Many AL facilities routinely provide or require such assistance for bathing.
If she does require assistance with two or more ADLs she then qualifies as chronically ill and meets the definition for deduction. Linked at the bottom is a sample certification form. She should have a plan of care in her facility signed by the director of nursing or health services director; if she meets the qualifications they can also certify. The facility should be very familiar with the process. Also linked is a prior discussion.

Did she pay an entrance fee? That generally is also deductible.


"Only certain residents at assisted living facilities will qualify as “chronically ill.” In order to qualify as “chronically ill,” a licensed health care practitioner must certify that the individual is unable to perform at least 2 activities of daily living without “substantial assistance” from another individual for a period of at least 90 days due to a loss of functional capacity. Activities of daily living include eating, toileting, transferring, bathing, dressing and continence. The IRS has issued interim guidelines which indicate that “substantial assistance” means both “hands-on assistance” and “standby assistance.” An individual needs “hands-on assistance” if they are unable to perform an activity of daily living without the physical assistance of another person such as a personal aide. An individual needs “standby assistance” if they require “the presence of another person within arm’s reach of the individual that is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the [activity of daily living].” Examples of “standby assistance” include being ready to catch an individual who is getting into or out of a bathtub or being ready to help an individual who is susceptible to choking while eating."

https://acrobat.adobe.com/id/urn:aaid:s ... 7911de2d55
viewtopic.php?t=364335

[mouth]

The most basic test for tax deductibility and qualification for deduction of the entire rent is ADLs. Can she perform all 6 ADLs every single day or does she need/receive assistance for at least two of them? Note in the description below that "stand by assistance" counts. Many AL facilities routinely provide or require such assistance for bathing.
If she does require assistance with two or more ADLs she then qualifies as chronically ill and meets the definition for deduction. Linked at the bottom is a sample certification form. She should have a plan of care in her facility signed by the director of nursing or health services director; if she meets the qualifications they can also certify. The facility should be very familiar with the process. Also linked is a prior discussion.

Did she pay an entrance fee? That generally is also deductible.


"Only certain residents at assisted living facilities will qualify as “chronically ill.” In order to qualify as “chronically ill,” a licensed health care practitioner must certify that the individual is unable to perform at least 2 activities of daily living without “substantial assistance” from another individual for a period of at least 90 days due to a loss of functional capacity. Activities of daily living include eating, toileting, transferring, bathing, dressing and continence. The IRS has issued interim guidelines which indicate that “substantial assistance” means both “hands-on assistance” and “standby assistance.” An individual needs “hands-on assistance” if they are unable to perform an activity of daily living without the physical assistance of another person such as a personal aide. An individual needs “standby assistance” if they require “the presence of another person within arm’s reach of the individual that is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the [activity of daily living].” Examples of “standby assistance” include being ready to catch an individual who is getting into or out of a bathtub or being ready to help an individual who is susceptible to choking while eating."

https://acrobat.adobe.com/id/urn:aaid:s ... 7911de2d55
viewtopic.php?t=364335

This is also very helpful!!! Thank you so much. It really could change things then for even this year but especially next year! I'll make sure to get that question asked and answered as soon as possible. I'll post back as well

PS Yes she paid an entrance fee. It was, effectively, one months costs even if it wasn't termed that way.

PPS: already conferred with my GF and can say with confidence her aunt is NOT being helped with any of the 6 ADL right now. I'm not surprised as she is at Level 0 for care at the facility and your quote reads like she'll need to be at Level 2 of the facility's scale before she'll qualify. Still, this is very helpful; thank you!

[FiveK]

The most basic test for tax deductibility and qualification for deduction of the entire rent is ADLs....

While the conditions for long-term care of a “chronically ill individual” may be sufficient, they may not be necessary for "a principal reason for being there is to get medical care" to qualify all Nursing Home costs as an itemized deduction.

The operative definition of "a principal reason" is probably a "facts and circumstances" thing. E.g., if an elderly diabetic was having difficulty controlling her blood sugar levels on her own, leading to fainting spells, etc., and the nursing home/assisted living facility would monitor and control the sugar levels, that could be "a principal reason" to be there. Other situations could also apply, even if they don't fall under the Long Term Care Insurance guidelines.

[FiveK]

Q: Working under the assumption that she entered this Assisted living facility such that her "reason for being in the home is personal" but later on her "principal reason for being there is to get medical care" because her condition has worsened, does that count from that point forward? I assume some form of medical attestation is needed in case of an audit? How would that conversation go with her Dr.?

_ "Hey Doc if she were living alone in a rental apartment right now (the only other viable option now) would you say she'd need to move into a facility like this for medical reasons?"

That seems about right.

In general I feel like what this is all telling me is

1) I should suggest she aim for the end of that 12.9% trough in the marginal rate
2) We won't know where the end of that trough is until late 2024 when we have a better feel for her actual 2024 medical expenses
3) There's no reason to go beyond the end of that trough unless there's a need to cover expenses (read: she's spent down her post-tax funds)

Sound about right?

Yes, it does. Good luck!

[mouth]

Thanks again. It does sound like maybe the point when her non-direct medical costs could be deductible could be a little greyer than the 2 of 6 ADL test; I must admit I don't think she's there yet.

And yet, she's already fallen at the AL once and it was two back to back falls at home that sent her to the ER and had the family banging the drum for relocation. Soooo maybe the Dr. would make that case too. I guess we'll ask!

Glad to have a path forward on the taxable distributions

Thanks again everyone. This has really helped. Of course this isn't closed and I'd greatly welcome anyone else with similar experience and lessons learned to give their experience.

[celia]

If her income is low, SS won't be taxed. Look at last year's return to check on this.

2. The medical deduction is only available on the part of her medical expenses that exceed 7.5% of her AGI. Once you add the RMD to pension and SS, how much is 7.5% of that?

3. Is #2 higher than her standard deduction? I think her SD is likely to be $15,700 unless she is blind in which case it would be higher.

After you subtract the medical deduction (assuming her deductions are more than the 7.5% of AGI, then the standard deduction of $13,850 for 2023) can be applied, and then you can look at her remaining AGI to find her tax bracket.

In the end, I suspect you might have to run side by side tax returns and compare the benefit (or lack thereof) of different IRA distributions. I don't know of any easier way to do this.

I agree or just do a "draft" return for 2023 using last year's return for her income streams.


To learn more about deductible medical expenses, read IRS Pub 502, especially page 11 that addresses Long Term Care which would need a written "plan" by a doctor saying she needs help with 2 ADLs or has mental decline.

[nonnie]

Thanks again. It does sound like maybe the point when her non-direct medical costs could be deductible could be a little greyer than the 2 of 6 ADL test; I must admit I don't think she's there yet.

And yet, she's already fallen at the AL once and it was two back to back falls at home that sent her to the ER and had the family banging the drum for relocation. Soooo maybe the Dr. would make that case too. I guess we'll ask!

Glad to have a path forward on the taxable distributions

Thanks again everyone. This has really helped. Of course this isn't closed and I'd greatly welcome anyone else with similar experience and lessons learned to give their experience.

I understand how difficult this is. I've researched this for a number of friends and fellow residents and the general consensus is to be somewhat aggressive "within the law." Since you are planning to aggressively generate income based on this deductibility makes it a heavier burden.

Many facilities aggressively promote the deductibility of medical tax deductions for rent. The downside of that is that sometimes the "care plan" calls for more services than are actually needed. Many facilities have written literature and online information about tax deductions.
In my *independent* living facility, two falls require a Fall Prevention program for the protection/safety of both the resident and facility. This program can consist of many things--staff checking in on resident several times daily, help with ADLs for safety reasons, referral to PT/OT .

Has your SO reached out to the Health Services Director of the facility? I think that would be the first step. What is the plan that is in place?
( Many Assisted Living communities have on staff a licensed nurse or social worker who prepares a plan of care, sometimes called a “Wellness Care Plan,” in coordination with the resident’s physician which outlines the specific daily services the resident will receive in the community.) Most facilities also have a "contract" physician who oversees the plan of care.

The worst part about a fall (I'm 81, fell and broke my shoulder a year ago) is the effort required to rehab and in some cases, overcoming the "fear" of falling to do that work. It takes daily work. Hopefully the aunt is getting OT and PT and has a robust Medicare/Medigap policy.

Best of luck to your SO, you and the Aunt.

[mouth]

Thanks again. It does sound like maybe the point when her non-direct medical costs could be deductible could be a little greyer than the 2 of 6 ADL test; I must admit I don't think she's there yet.

And yet, she's already fallen at the AL once and it was two back to back falls at home that sent her to the ER and had the family banging the drum for relocation. Soooo maybe the Dr. would make that case too. I guess we'll ask!

Glad to have a path forward on the taxable distributions

Thanks again everyone. This has really helped. Of course this isn't closed and I'd greatly welcome anyone else with similar experience and lessons learned to give their experience.

I understand how difficult this is. I've researched this for a number of friends and fellow residents and the general consensus is to be somewhat aggressive "within the law." Since you are planning to aggressively generate income based on this deductibility makes it a heavier burden.

Many facilities aggressively promote the deductibility of medical tax deductions for rent. The downside of that is that sometimes the "care plan" calls for more services than are actually needed. Many facilities have written literature and online information about tax deductions.
In my *independent* living facility, two falls require a Fall Prevention program for the protection/safety of both the resident and facility. This program can consist of many things--staff checking in on resident several times daily, help with ADLs for safety reasons, referral to PT/OT .

Has your SO reached out to the Health Services Director of the facility? I think that would be the first step. What is the plan that is in place?
( Many Assisted Living communities have on staff a licensed nurse or social worker who prepares a plan of care, sometimes called a “Wellness Care Plan,” in coordination with the resident’s physician which outlines the specific daily services the resident will receive in the community.) Most facilities also have a "contract" physician who oversees the plan of care.

The worst part about a fall (I'm 81, fell and broke my shoulder a year ago) is the effort required to rehab and in some cases, overcoming the "fear" of falling to do that work. It takes daily work. Hopefully the aunt is getting OT and PT and has a robust Medicare/Medigap policy.

Best of luck to your SO, you and the Aunt.

Thank you. As a matter of fact, I know there is a plan, but not the details. They are scheduled for the "One Month Welcome Check-in" which is now about 2 weeks late due to a facility wide COVID outbreak and the aunt being hospitalized for COVID. I think that meeting will be a great place to ask these questions to the Health Services Director.

Picking at a point you seem to be making: are you saying facilities might establish a care plan beyond what's necessary to allow deduction claims? That would seem counter productive to the resident since it surely also raises the cost level of their care. Or am I misunderstanding what you mean?

I'm sorry to hear about your fall and I hope you're recovered / recovering well. She's in OT/PT and actually doing her exercises (another story!) and it seems so far her insurance is doing a good job. So we're thankful for that. Woah Boy the crash course we're going through on medicare, supplemental, all the Parts, medicaid, etc has been a long and continuing one. Good practice for ourselves I guess, #silverlinings

[nonnie]

I'm fine, Thanks for asking. I'm sorry my response was confusing. No I wasn't saying that a facility would devise a care plan beyond what was necessary for deductions, I was saying facilities are generally very aggressive in devising care plans. Yes, it is advantageous to them and disadvantageous to the resident.

I'm chair of the Wellness committee at my IL facility and thus have way more interactions with this topic than most. (The ADL questions also come up when one wants to use LTC and I have been an advocate for residents in this area)

It's not always a matter of greed on the part of the facility when they increase services in a care plan. They are responsible for the safety of their residents and if they should have known there was a fall risk or other problems--especially in the case of cognitive issues -there are liability issues. At the best facilities, they also care about the well-being of their residents on a very personal level and do everything to help them thrive.

Generally a care plan is set up when entering the facility. Then, when any changes occur, it is revised. Generally there are statutory requirements for review. Sorry to hear about the COVID outbreak, it can certainly be a challenge to a facility, hopefully the aunt is on the road to recovery.