Re­peal of med­i­cal de­duc­tion prompts tax bill push­back

South Florida Times - - BUSINESS - By


WASH­ING­TON - The med­i­cal ex­pense de­duc­tion tar­geted for re­peal by GOP tax writ­ers has helped to off­set costs in­clud­ing nurs­ing home care and fer­til­ity treat­ments, laser eye surgery and travel out-of-state for a sec­ond opin­ion on a rare can­cer.

Sev­eral mil­lion peo­ple un­lucky enough to face big med­i­cal bills not cov­ered by their in­sur­ance would lose a valu­able de­duc­tion un­der the House GOP bill. Groups rep­re­sent­ing older peo­ple and pa­tients are try­ing to save it.

“Any­body who is pay­ing for the cost of nurs­ing home care is pay­ing a great deal of money, and they are go­ing to lose that de­duc­tion, and their taxes are go­ing to go up,” said Thomas DeCoursey, a re­tired lawyer from Kansas, in his 70s.

He re­lies on the de­duc­tion to help off­set costs as­so­ci­ated with nurs­ing home care for his wife, who has Alzheimer’s. Some of his own med­i­cal ex­penses also fac­tor in. DeCoursey es­ti­mates that in a cou­ple of years their an­nual costs will pass $100,000.

“There are a lot of peo­ple in my shoes,” said DeCoursey, who lives in Lea­wood, a well-to-do Kansas City sub­urb that voted for Pres­i­dent Don­ald Trump last year.

About 9 mil­lion house­holds, 6 per­cent of tax fil­ers, claim the med­i­cal ex­pense de­duc­tion, said Gordon Mer­min, a se­nior re­searcher at the non­par­ti­san Ur­ban-Brook­ings Tax Pol­icy Cen­ter. The an­nual cost to the U.S. Trea­sury is about $10 bil­lion, which ranks it as a mod­est tax break. Those who ben­e­fit tend to be mid­dle-in­come and up­per-mid­dle-in­come peo­ple.

“For the peo­ple who claim it, it is not a triv­ial ben­e­fit,” said Mer­min.

The med­i­cal ex­pense de­duc­tion is also ver­sa­tile. In ad­di­tion to nurs­ing home care, not gen­er­ally cov­ered by med­i­cal in­sur­ance plans, it can be used for: • Trans­porta­tion ex­penses to a top hos­pi­tal, like a com­pre­hen­sive can­cer cen­ter. • Some long-term care in­sur­ance pre­mi­ums. • In­stalling spe­cial­ized med­i­cal equip­ment in a pa­tient’s home or ve­hi­cle. • Den­tal pro­ce­dures. • Bills from out-of-net­work doc­tors.

“When you are faced with large med­i­cal costs and don’t have a lot of op­tions, this is one that helps peo­ple,” said Bar­bara Col­lura, pres­i­dent of RE­SOLVE: The Na­tional In­fer­til­ity As­so­ci­a­tion. Most in­sur­ance plans do not cover fer­til­ity treat­ments, which can cost from $15,000 to $30,000. The de­duc­tion can off­set some of that cost.

Ad­vo­cacy groups push­ing back against re­peal may get help from the Se­nate.

House Repub­li­cans de­fend their ap­proach.

In a state­ment, Ways and Means GOP spokes­woman Lau­ren Aron­son said the bill would al­low peo­ple to “keep more of the money they earn for ex­penses that arise through­out their lives — such as med­i­cal bills — rather than pro­vid­ing a myr­iad of pro­vi­sions that many Amer­i­cans may only use once in their life­times, and only if they go through the hassle and frus­tra­tion of item­iz­ing.”

Repub­li­cans say do­ing away with, or curb­ing, tax breaks cre­ates a big pot of rev­enue, which can then be used to lower tax rates. The lower rates and higher stan­dard de­duc­tion in the GOP bill would com­pen­sate for the loss of par­tic­u­lar tax breaks, they say.

An ar­gu­ment against the med­i­cal de­duc­tion is that it can’t be eas­ily claimed.

Tax­pay­ers have to have enough de­duc­tions to item­ize in the first place.

Then there’s an­other step. Tax­pay­ers can only deduct med­i­cal ex­penses that ex­ceed 10 per­cent of their in­come, in most cases. Take a hy­po­thet­i­cal sin­gle man un­der 65 mak­ing $45,000 a year. If he had $4,000 of qual­i­fy­ing med­i­cal ex­penses, he could not deduct any of it.

In­de­pen­dent an­a­lyst Greg Rosica, a tax part­ner at the Ernst & Young ac­count­ing firm, said tax leg­is­la­tion has to be looked at in its to­tal­ity, not through the lens of in­di­vid­ual tax breaks.

“It is a change,” he said of the po­ten­tial loss of the med­i­cal de­duc­tion. “It’s not nec­es­sar­ily the loss of some­thing, but it’s some­thing that’s be­ing re­placed and changed.”

Democrats have jumped on the is­sue, ar­gu­ing that the med­i­cal ex­pense de­duc­tion would be sac­ri­ficed to re­duce taxes for the wealthy.

“One of the chal­lenges Repub­li­cans have with this pro­vi­sion is that peo­ple can un­der­stand it,” said Rep. Richard Neal of Mas­sachusetts, se­nior Demo­crat on the tax-writ­ing Ways and Means Com­mit­tee. “Some of this tax stuff is ar­cane; this is not.”

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