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Old 09-23-2017, 08:53 AM
 
29,779 posts, read 34,863,854 times
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Quote:
Originally Posted by Nightengale212 View Post
Since you seem to know quite a bit about this topic maybe you can answer this question for me. Aside from those who receive military disability pensions which are not taxed at the Federal and State level, the rest of us who are or will receive pensions from private sector and various levels of government tax wise these pensions are treated as regular income Federally as well as in several states including mine. From what I have been researching regarding tax deductions for LTC, those services provided in a LTC facility deemed a medical necessity can be tax deducted, but other services not considered a medical necessity can't and I would guess food, lodging, hygiene assistance and other non skilled services would fall into the category. So, this leads to my question since with my 3 legged stool retirement income of a FERS pension, TSP/401K withdrawals, and at age 70 when I claim my higher social security benefit those 3 streams of income will trigger a fairly large combined Federal and State tax liability taking the standard deduction. Obviously anyone with any type of taxable retirement income that would go towards funding LTC would be itemizing their deductions in the hopes that there will be more to go towards paying the bill, but if someone is in basically a custodial status at a LTC facility that cost $100,000 annually, realistically how much of that $100,000 is going towards medical necessity care that can actually be tax deducted ? And doesn't something like $7,500 out-of-pocket for medical expenses have to be paid out first then anything above that then can be tax deducted ?

You and anyone else who can enlighten me on taxes as they relate to LTC would be appreciated.
A great question that is difficult to find the answer for in advance. Your question is also one of ours and the reality is that you may well need a tax accountant while in the home to advise who ever has the power of attorney. It can change from month to month depending on services provided. The full 100K cost would not be deductible as much is not medical but normal expenses. When I ask the folks at CCRC's they are quick to tell you that your tax advisor would need to be the one to answer.

All of that being said you would need to have in pensions and SS an amount that after normal taxes would still allow you to pay the monthly costs. That is why it can become a multi strand approach to paying for it.

Even getting there is expensive. If you go into a CCRC they are not providing you with normal medical costs being provided. You will still need Medicare and whatever supplemental coverage beyond that you have. Often having that coverage may be required for admission.

As I noted in another post it can often be easier for the surviving spouse to afford the CCRC or LTC than for a couple.

In summary you need to be able to have sufficient income after normal tax deductions that covers the cost of the LTC and have your medical deductions become a refund of costs. You should have a minimum monthly after tax income of 9K plus to pay that 100K tab which might not be all of the expenses you occur. There can be hospital and specialist cost so you would need to still have Medicare and related supplemental insurance. in many cases.
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Old 09-23-2017, 05:08 PM
 
Location: R.I.
977 posts, read 605,084 times
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Thanks for your response. I think I need to do a little more research about taxes and LTC, and will pick my accountant's brain about it when I do my taxes next year.
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Old 09-23-2017, 07:06 PM
 
29,779 posts, read 34,863,854 times
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Quote:
Originally Posted by Nightengale212 View Post
Thanks for your response. I think I need to do a little more research about taxes and LTC, and will pick my accountant's brain about it when I do my taxes next year.
The CCRC we eventually affiliated with as future residents is on a monthly fee basis for all levels of care from Independent Living to Skilled Nursing Care. We assumed that the basic monthly Independent level fee included little if any tax deductible medical care. That in itself was a chunk of change. So how much of the difference moving up to Assisted Living might count as a medical deduction was a starting point.
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Old 09-24-2017, 09:47 PM
 
20,559 posts, read 16,625,375 times
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Quote:
Originally Posted by TuborgP View Post
The CCRC we eventually affiliated with as future residents is on a monthly fee basis for all levels of care from Independent Living to Skilled Nursing Care. We assumed that the basic monthly Independent level fee included little if any tax deductible medical care. That in itself was a chunk of change. So how much of the difference moving up to Assisted Living might count as a medical deduction was a starting point.
There really is no part of the fee that is for medical care. The most they do in my mother's ALF is give people pills, monitor their vitals, take care of a cut, etc, none of which are billable skilled services even if a nurse is doing them.
When you need care, it still goes through insurance. When the doctor comes into the place and sees her, Medicare gets billed, it's not part of the fee. When my mom gets out of rehab (she is in the hospital a couple of times a year at least now) and needs special care like getting the bandages on her legs changed every other day (she gets cellulitis and wounds), they arrange visiting nurses from an outside agency, and again Medicare gets billed for it. I really can't think of anything about her ALF fee that would count as a medical expense.
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Old 09-25-2017, 06:54 AM
 
1,227 posts, read 1,259,742 times
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This is the explanation of the below pages from IRS Publication 502 regarding ALF deductibility for Federal Income Taxes:

http://www.pekdadvocacy.com/document...ilityCosts.pdf


Read Pages 11 and 12 below:
https://www.irs.gov/pub/irs-pdf/p502.pdf
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Old 09-25-2017, 07:07 AM
 
6,880 posts, read 7,278,655 times
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^^ Thanks!!!!
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Old 09-26-2017, 09:17 AM
 
Location: Philadelphia/South Jersey area
2,875 posts, read 1,403,268 times
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Got this today in my email. pretty interesting.

Should I Buy Long-Term Care Insurance?

According to a 2016 report from the National Association of Insurance Commissioners (with credit to Christine Benzís excellent ď75 Must-Know Statistics About Long-Term CareĒ for directing me to the report), for people turning age 65 in 2015-2019:

48% are expected to have no long-term care costs during their lifetimes,
15.4% will have costs of up to $50,000,
9.7% will have costs of $50,000-$100,000,
11.7% will have costs of $100,000-$250,000, and
15.2% will have costs that exceed $250,000.


Another noteworthy point: people with lower incomes are more likely to have an extended need for long-term care. (See Table 5 on page 35 of the NAIC report.) This isnít surprising, since people with lower incomes are often in worse health than people with higher incomes. But it certainly makes planning even more challenging for lower-income people.

I'm reading further to see how this was calculated. so this is just for informational purposes only.
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Old 09-29-2017, 01:17 PM
 
8,197 posts, read 11,911,100 times
Reputation: 17974
Quote:
Originally Posted by MadManofBethesda View Post
Not only does my LTCi policy costs less than my auto insurance, it is only 1/4 of the cost of my homeowner's insurance policy. (Of course, auto and homeowner policies are fairly expensive in Florida, especially in Miami.)
Quote:
Originally Posted by ocnjgirl View Post
What does it pay for (in $ amounts), and for how long? What is your premium, and how old were you when you purchased it?
Quote:
Originally Posted by MadManofBethesda View Post
I'm currently hospitalized so I don't have access to my policy to be able to give you the exact figures. Moreover, electricity still hasn't been restored to my house so no telling when I'll be going back there. (I'll be going to our condo upon discharge.) I'll answer your questions when I'm able to get back into our house.
I finally made it back to our house, so I can answer your questions for you.

How old were you when you purchased it?

I purchased the policy in 2008 at the age of 52. This was a little earlier than I normally would have purchased LTCi, but the Federal Judiciary was rolling out a new LTCi program and employees were offered a one-time-only opportunity to enroll without regard to medical history or condition.

What is your premium?

$1,494/year

What does it pay for (in $ amounts), and for how long?

100% of the eligible expense per day of nursing home care or alternate care facility, not to exceed $340 per day. The current lifetime maximum benefit is $621,000 (5 years).

100% of the eligible expense per day of community based care (e.g., at home), not to exceed $255 per day.

Other Benefits

Hospice Care Facility Benefit: 100% of expenses incurred, not to exceed $340/day.
Emergency Alert System Benefit: 100% of actual expense incurred, not to exceed $255/month.
Caregiver Training Benefit: The actual expense or $765, whichever is less.
Caregiver Benefit (e.g. family member): $85 per day not to exceed $2,550 per year.
Temporary Bed Holding Benefit: 21 days
Guaranteed Benefit Increase: Option to purchase increased benefits amounting to at least 5% compounded annually since last offer.

Let me know if you have any other questions.
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Old 09-29-2017, 01:24 PM
 
71,550 posts, read 71,712,424 times
Reputation: 49140
how are you feeling ?
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Old 09-29-2017, 01:41 PM
 
8,197 posts, read 11,911,100 times
Reputation: 17974
Quote:
Originally Posted by mathjak107 View Post
how are you feeling ?
As well as can be expected, I suppose. I begin my 5th cycle of chemo next week. As if these last few months haven't been bad enough, I got a little added surprise this morning when my dermatologist's office called to inform me that I have melanoma on my scalp. The good news just keeps on coming, lol.
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