State Household and Dependent Care Tax Credits to Support Personal Assistant Services
(2011, December). State Household and Dependent Care Tax Credits to Support Personal Assistant Services. San Francisco, CA: Center on Personal Assistance Services.
Abstract
Although we generally think of nursing homes in connection with older Americans, statistics show that residence in nursing homes and similar institutions is most prevalent among Americans with disabilities, regardless of age.
The US Supreme Court ruled in 1999 that under the Americans with Disabilities Act (ADA) unnecessary segregation of people with disabilities in nursing homes violated the "integration mandate" of the law. Although per capita costs of home and community-based services are typically far lower than those of nursing homes, implementation of the Olmstead decision has proved difficult for a number of reasons.
Tax subsidies for the costs of home and community-based services represent one option. The federal tax credit for household and dependent care services, while far from perfect, represents one useful model on which provisions in some 23 states are based.
With the likely continuation of budgetary pressures on the Medicaid program, public-sector resources for home and community-based services (called personal assistance or PAS) are likely to decline. Structural features of the MEDICAID program make it easier for states to cut these costs than to curtail use of nursing homes. In that light, the ability of taxpayers to utilize tax benefits, including the household and dependent care credit, are likely to become increasingly important.
Against this backdrop, the federal provisions and the ancillary state tax provisions building upon it are described.