Argentum, LeadingAge and the American Seniors Housing Association have jointly petitioned Congress to rethink the proposed tax reform bill, saying the elimination of the existing deduction for medical expenses will hurt seniors disproportionately.
The Tax Cuts and Jobs Act of 2017 (HR 1) proposes to double the standard deduction but remove the medical expenses deduction. If passed, it would be the first time in 75 years that there would be no tax deduction for excessive medical expenses.
More than half of the 8.8 million people who claim medical expense deductions are over 65. Without an expense deduction as tax relief, many seniors could be forced to rely on an already-stretched Medicaid system. Those with dementia could fare far worse:
“A large and growing number of residents also suffer from Alzheimer’s disease and other forms of age related dementia. The medical expense deduction is widely used by this population to defray some of their costs associated with growing old and suffering from chronic conditions,” the associations stated in a letter to House Speaker Paul Ryan, Minority leader Nancy Pelosi and two other congressional leaders Monday. “We estimate that a resident living in a Memory Care community will incur out-of-pocket costs of at least $70,319 each year. Under current law, assuming a modest income level, they would have no tax liability. Under the new plan, they could face a tax liability as high as $6,100.”
In a separate letter submitted to Congress Tuesday, nearly 40 groups expressed similar sentiments, saying nearly 9 million people claim medical tax deductions each year.
“Low and middle-income families and individuals with significant disabilities face a constant stream of deductibles and high co-pays and also pay out-of-pocket for various services and devices that enable the individual to live a productive life in the community,” said the letter, which was lead by AARP and co-signed by 37 other groups.
Even Medicare beneficiaries need to spend out-of-pocket money on medical expenses—an average of $5,680 per person, a significant portion of an older person’s income, the AARP letter states.