Which specific in‑home caregiver expenses qualify as deductible custodial care under 38 C.F.R. §3.278?
Executive summary
The regulatory baseline is 38 C.F.R. §3.278, which treats payments to licensed health‑care professionals and costs of necessary medical care as deductible medical expenses for VA pension purposes [1] [2]. In practice, only the portion of in‑home caregiver costs that represents medically necessary services performed by or under the supervision of an appropriate health‑care provider — not routine household help, meals or lodging — is treated as deductible custodial care [2] [3].
1. What 38 C.F.R. §3.278 actually authorizes for “deductible medical expenses”
Section 3.278 adopts the familiar rule that payments to a health‑care provider for services within the scope of that provider’s professional capacity are medical expenses, and it expressly enumerates institutional care (hospitals, nursing homes, medical foster homes, inpatient treatment centers) as deductible where appropriate [2] [1]. The regulation’s definitional language includes licensed physicians, nurses, therapists and similar professionals as qualifying providers whose services generate deductible medical expenses [2].
2. Which in‑home caregiver expenses fit the deductible “custodial care” category
Under §3.278, in‑home caregiver costs are deductible to the extent they are payments for medical services — for example, skilled nursing, physical or occupational therapy, medication administration, wound care, or other treatments delivered by a licensed provider or under professional supervision [2] [4]. Multiple reporting sources emphasize that only the medically necessary portion of a caregiver’s work — tasks documented in a care plan or performed by qualified personnel — qualifies as a deductible expense [4] [5]. Transportation related to medical care is also listed as a deductible medical expense where applicable [2].
3. What does not qualify: nonmedical, custodial or residential costs
Costs that are essentially nonmedical — routine household chores, companionship, errands, meal preparation, and lodging or room and board where the placement is “primarily for non‑medical reasons” — are not deductible as medical expenses under the regulatory and IRS guidance [3] [2]. The IRS precedent cited in related guidance makes clear that when a home or facility is used for nonmedical reasons, only the actual medical care portion (not meals and lodging) is deductible; that interpretive distinction maps directly onto how §3.278 treats in‑home custodial services [3] [2].
4. Documentation, allocation and practical limits caregivers must meet
Practically, claimants must separate and substantiate the medical portion of caregiver charges: maintain a written care plan, invoices showing services by licensed providers, time logs distinguishing medical tasks from nonmedical assistance, and receipts for uncompensated expenses [5] [4] [6]. Several practitioner guides and tax‑advice sources stress that only the portion of expenses not reimbursed by insurance or paid from pre‑tax accounts (FSAs/HSAs) can be deducted — a constraint that mirrors the VA’s “not compensated by insurance or otherwise” framing [6] [7].
5. Where interpretation or agency discretion can alter outcomes — alternate views and implicit interests
Regulation language that ties deductions to services “within the scope” of licensed providers leaves room for VA adjudicators to parse ambiguous caregiver arrangements: family aides, mixed‑duty home‑health workers, or agency employees who perform both medical and nonmedical tasks may require allocation and adjudicator judgment [2]. Advocacy and tax guides emphasize claimant‑friendly interpretations (maximizing deductible medical time when care plans document it), while VA procedural rigor and anti‑fraud concerns push toward conservative allocations — an implicit tension between easing veteran hardship and guarding program integrity [4] [8].
6. Bottom line and reporting limits
The clear rule: payers can deduct in‑home caregiver costs under §3.278 only for the medically necessary services performed by licensed or otherwise qualifying providers, and only to the extent those costs are not reimbursed — routine homemaker tasks, meals, lodging or uncompartmentalized caregiver time do not qualify [2] [3] [6]. This analysis is limited to the cited regulatory and public guidance; the eCFR and LII restatements provide the controlling language but individual claims are subject to VA adjudication and the need for contemporaneous documentation [1] [2].