Obamacare offers choice...support kids or aging parents

What will we do?

While most Americans wait to find out how Obamacare will affect their own health care situation, Martha R Gore, Watch Dog Politics Examiner, Examiner.com, speculates that those who are most likely to bear the brunt of the legislation are the demographic who care for aging parents as well as adult children. 

Medicare cuts could pose a conflict for those “middleagers,” writes Gore as they choose between health care costs for themselves and their parents while weighing the option of a multigenerational household to help keep costs down. 

The follow is a sample of cuts to Medicare:

• Home health care
• Diagnostic imaging like MRIs, CT scans
• Ambulances
• Diagnostics labs
• Durable medical equipment
• Power wheelchairs unless rented for previously rented for 13 months
• Long term hospitals, nursing homes and inpatient rehab facilities
• Dialysis treatment
• Inpatient psychiatric hospitals
• Hospice
• Hospitals that treat low income seniors

According to an article in NPR the number of elderly Americans needing expensive care is going to surge as more Baby Boomers retire and begin to depend upon Medicare to meet their health needs. This is the age group born between 1946 and 1964 and many of them are expected to live to live 85 years or older. Today there are 6 million Americans in that age group.

As more cuts to Medicare are made it may mean many Americans that are still supporting children may be expected to shoulder more of the cost of taking care of the health and medical needs of elderly parents.

In some cases, this may require that the aging parent move into the family dwelling in order to cope with the financial challenges. The Pew Research Center reports that this is already happening with about 20% of older people living with another generation. However doubling up to split living costs may fall short of what is needed to care for an aging parent. Three generations in one household may become the rule rather than the exception.

Tax Tips for Elder Caregivers

A special thank you to Minda Cutcher,MBA,Financial Advocate for Seniors, for allowing us to share her expert information with all of our readers.

If you are caring for an aging relative who qualifies as your dependent, you may be able to claim medical expenses you incurred as a result of that care on your income tax.
•Medical insurance premiums (unless pre-tax)
•Prescription medicines
•Doctor bills
•Hospital fees
•Travel to and from medical appointments

Only those expenses paid during the tax year are deductible for that year. Also, expenses are limited based on your adjusted gross income (AGI). For 2011, medical expenses must be in excess of 7.5% of AGI. You can only claim those amounts for which you have not been reimbursed by private insurance or Medicare. Additional special expenses, such as wheelchairs and repairs, ambulance services and oxygen may also be claimed. Check with your tax advisor for the current list of items that fall into this category. Improvements to your home made for medical reasons may also be deductible, but may be limited based on whether they increase the value of the home. Certain structural improvements to accommodate disability, such as the following, are fully deductible regardless of home value impact:

•Ramps
•Widened doorways and hallways
•Railings and grab bars
•Lifts (but not elevators) and
•Warning systems

Other items that may be deductible:

•Special equipment or hand controls in a car
•Medical expenses incurred in a nursing home
•Medically related nursing, therapeutic and or/aide services

Here are a few publications offered by the Internal Revenue Service that may help you understand the deductions available to you. These can be ordered by phone 800-TAXFORM, or online at www.irs.gov.

•Publication 502 – Medical and Dental Expenses
•Publication 554 – Tax Guide for Seniors
•Publication 907 – Tax Highlights for Persons with Disabilities
•Publication 929 – Tax Rules for Children and Dependents

Every situation is unique, so be sure to check with your tax advisor. To learn more...