Nursing home patients get tax relief

Private-pay seniors can get full credit for 'granny tax' on their 2005 returns

Sunday,

March 12 , 2006

Good news for private-pay nursing home residents: You can get a full credit for the so-called "granny tax" on your 2005 state tax return due next month.

The credit was part of the state budget passed last year, said Robert Nasso of Rotenberg Health Care Consulting, which does accounting work for more than 80 nursing homes.

The credit was effective Jan. 1, 2005, meaning that private-pay patients will be able to get all their tax payments back when they file their 2005 tax returns.

It also could be good news for the nursing homes. Typically, Medicaid patients outnumber private-pay residents at are facilities, and homes receive smaller payments from Medicaid. Before the granny tax credit, private-pay residents would exhaust their funds more quickly, forcing them onto Medicaid sooner.

"Talk about picking on our most frail population," said Jim DeVoe, president of Seniorsfirst Communities and Services, which runs Kirkhaven.

The granny tax, cousin to the "sick tax" on hospitals, is levied on nursing home bills to help cover health-related state expenses such as charity care.

DeVoe said it can add up to $5,000 to $6,000 a year per patient.

Now residents will still have to pay the money, but they'll get credit for it when they file a state tax return the next year.

"It's long overdue in coming, not only in tax relief for our frail elderly, but it's just an economic relief that these folks really needed," DeVoe said.

The new rules also allow the state to get more matching Medicaid funds from the federal government, DeVoe said.

Kirkhaven is sending out a letter to its private-pay residents telling them about the credit.

"My concern is that I haven't heard much about it," DeVoe said. "I'm worried it's one of those things that people are going to miss. And that would be the greatest injustice of all. It's bad enough that they are making them do it in the first place. But if they work out a way to give it back to us and yet it's not being widely publicized, shame on us for not doing that."

Jack Pease, senior vice president and administrator at St. Ann's Community, said he's happy that residents are getting a break and that it could keep some off Medicaid for a longer period. But he does wish that the tax could just be eliminated, saving his organization the administrative costs of collecting the tax and then sending it off to the state.

"We get blamed for it, we get yelled at for it and then we send it on. And we feel lousy having to collect it," Pease said.