Obamacare: deducting nursing home costs from income

My husband had a stroke in December of 2012, and was moved into a nursing home in February 2013.  He still has his Social Security Income, and I work in my own business.  I have to buy my own health insurance.  With his income, I would not qualify for any subsidies.  This doesn’t seem fair, because virtually all of his income goes to pay for his care.  Can I count just my own income for the exchange subsidies? 

Wife in Maine

Dear Wife in Maine,

For health insurance subsidies, your household is your household, no matter where the person lives.  However, you have a tax deduction that will greatly lower your household income.

Since you are spending a great deal more than 10% of your household income on medical care (which includes long term care), you can reduce your adjusted gross income dramatically.  The first 10 percent, unfortunately, doesn’t get deducted but every dollar after that does.  So, for example, if your household income is $75,000, the first $7,500 for your husband’s care doesn’t “count”.  If his care cost $45,000, then you would deduct $37,500 ($45,000 minus the $7,500) from your gross income.

Have an accountant do this for you, so you can be confident you are stating the right income and you won’t be tripped up later.  This deduction will wipe out most of his income, leaving you where you wanted to be – with essentially only your income “showing” for the exchange subsidy calculation.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.