Blog Post

What’s In the House Tax Plan: Medical Expenses

Next week, the House of Representatives will vote on the “Tax Cuts and Jobs Act” released by House Republicans. The Republican tax plan impacts a wide range of tax benefits that women and families rely on, including medical expenses. Here are some of the ways the House Republican tax plan’s proposal to eliminate medical expenses deduction would impact women and families:

1. The House bill would raise taxes for millions of middle-class families. The current tax code allows families to deduct medical expenses that exceed 10% of their income. In 2015, 8.8 million families received this deduction, altogether receiving $87 billion in deductions. According to AARP’s calculation of IRS data, approximately 70 percent of filers who received this benefit have incomes of $75,000 or less, and nearly half have incomes of less than $50,000. Thus, eliminating this critical tax benefit would raise taxes of millions of middle-class families.
2. The House bill would raise taxes for families with costly, serious medical conditions, kicking families when they’re down. Although the Affordable Care Act did much to help families contend with high health care costs by removing annual or lifetime spending limits, the medical expenses deduction is still a critical tool to help families contend with high out-of-pocket costs. Allowing families who spend more than 10 percent of their income on out-of-pocket medical costs to write them off would help ease some of the financial stress facing families struggling with serious illness. Take for example, a family living in a rural area who receives a diagnosis that their daughter has a rare form of cancer. Then, the family discovers that their daughter needs to see a specialist who is outside of their network. The medical expenses for that family can skyrocket quickly, putting tremendous financial pressures on them. For the Witzler family from Maryland, who has a son born with spina bifida, the medical expenses deduction is “the difference between their son getting treatment now, or needing more public services later in his life.”
3. The House bill would raise taxes for seniors. Approximately 75 percent of filers who claim the medical expenses deduction are 50 years or older, and the medical expenses deduction is a valuable tax benefit for seniors. This is not surprising as many seniors may have chronic conditions or need long-term care services. In particular, long-term care is a huge cost for seniors and families. On average, the cost for long-term care can range from $20.50 an hour for a health aid to $3,628 per month for a one-bedroom unit in an assisted living facility to $7,698 per month for a private room in a nursing home. Thus, eliminating the medical expenses deduction would worsen many seniors’ financial situations.

Although the House Republican tax bill is being pitched as a tax cut for the middle class, the details show that many middle-classfamilies—including families facing serious medical issues and many seniors—would actually see a tax hike. At the same time, big corporations and wealthy individuals would receive the vast majority of the benefits of the bill. Making families with serious medical conditions and seniors pay for tax cuts for the wealthy and big corporations is last thing that should be in any tax proposal. House Republicans need to go back to the drawing board.