Three tax-savings ideas to help seniors

Posted Apr 16, 2018 by Tim Sandle
One major expenditure awaiting a large percentage of U.S. citizens near the end of their lives is long-term care. Expenses extend to assisted living facilities or nursing homes. A new guide gives advice.
File photo: Elderly man drinking coffee at Fosnes Nursing Home in Norway at Christmas Time.
File photo: Elderly man drinking coffee at Fosnes Nursing Home in Norway at Christmas Time.
Thomas Bjørkan (CC BY-SA 3.0)
For a country with little in the way o state support or socialized healthcare, the elderly in the U.S. who are of low income face a number of challenges. These challenges include finding the money to pay for a nursing home, or an assisted living facility or another form of care. However, there are solutions of the U.S. population in terms of tax deductions that can be taken advantage of. These deductions can provide extra money to help with long-term care expenses, according Chris Orestis, who is the Executive Vice President of GWG Life.
Orestis has recently published the book Help on the Way, which provides guidance about long term care benefit plans and information about Medicare and Medicaid. The book also provides guidance on the various forms of senior care and the legal rights of owning life insurance. Orestis has also written the text A Survival Guide to Aging. This second book focuses on issues such as long term care planning, improved longevity through exercise, eating, and healthy lifestyles, legal and political issues, events in the news, and interesting stories that can help shine a light on making the most out of peoples’ Senior Living years.
Orestis has provided Digital Journal readers with three tips for U.S. citizens thinking about their future care plans. These are:
Costs of senior living and long-term care.
Orestis writes "If you’re diagnosed as chronically ill, some long-term care expenses can be tax deductible." These expenses need to be more than 7.5 percent of a person's adjusted gross income. Orestis defines“chronically ill” as: “You must be diagnosed and under a certified care plan issued by a doctor or nurse that addresses your inability to perform two or more activities of daily living."
He also adds: "Or you need to be suffering from cognitive impairments....Family members may also be entitled to tax deductions if they are financially contributing to the costs of care for a loved one and qualify as a dependent."
Long-term care insurance premiums
Here owners of long-term care insurance policies can take tax deductions on premiums they pay for qualified plans – as well as other reimbursed medical expenses such as Medicare premiums – as long as the premiums are greater than 7.5 percent of adjusted gross income, according to Orestis.
Estate tax changes and life insurance
It is notable that many U.S. based large life insurance policies were purchased over the years as a wealth and legacy-preservation strategy to offset the impact of estate taxes. Orestis states that: "Prior to tax reform, the first $5,490,000 of income was exempt from the estate tax. Now that has been nearly doubled to $10 million. “That means policies currently in force to protect estates valued below the new level are no longer necessary."
He expands: "This presents a chance for the policy owner to sell the policy and recoup some or all of their premium payments under more advantageous tax conditions.”
In offering these tips, Chris Orestis aims to help elderly people in the U.S. understand the tax rules and how they apply to their personal situation, and to use this to help with care solutions.