The ‘Health Tax’ Could Cost Individuals this Tax Season
WASHINGTON, Oct. 18, 2017 /PRNewswire-USNewswire/ — AARP today gave enthusiastic support for bipartisan legislation titled the Seniors Tax Hike Prevention Act of 2017 (S. 1977) by US Senators Rob Portman (R-OH) and Sherrod Brown (D-OH). The bill would protect seniors with high health care costs from a “health tax” in 2017.
“If this needed, bipartisan legislation does not pass soon, older taxpayers with high health costs will face a 2017 health tax hike due to a reduced medical expense deduction,” said AARP CEO Jo Ann Jenkins. “The medical expense deduction helps millions of middle income older Americans to offset high out-of-pocket health care costs.”
The Seniors Tax Hike Prevention Act of 2017 would allow for a two year delay in the scheduled increase from 7.5% to 10% of an income threshold after which those aged 65+ can deduct medical expenses on itemized tax returns. AARP supports this temporary delay as a necessary immediate step toward permanently restoring the tax threshold to 7.5% for older Americans with high out-of-pocket health care costs.
Although the overwhelming majority of Americans age 65 and older have Medicare coverage, beneficiaries still spend a large portion of their income on out-of-pocket health expenses. The average Medicare beneficiary spends about $5,680 out-of-pocket on medical care. Many older Americans face high costs for long-term services and supports, which are generally not covered by Medicare, as well as for hospitalizations and prescription drugs. Tax relief for middle income seniors with high medical costs provides needed financial resources.
According to recent IRS data:
- 56% of those taking the medical expense deduction were age 65 or older
- Nearly 31% of taxpayers age 65+ who claimed the medical expense deduction had annual income under $50,000
- Nearly 73% of people of all ages claiming the medical expense deduction had annual income under $75,000
“AARP supports this bipartisan bill that would help Americans who face high health care costs,” added Jenkins. “We urge Congress to follow the lead of Senators Brown and Portman by enacting measures such as this that will help protect older Americans from high health and long term care costs.”
US Senators Shelley Moore Capito (R-WV) and Bill Nelson (D-FL) also serve as original cosponsors of the bill.
AARP is the nation’s largest nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. With nearly 38 million members and offices in every state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, AARP works to strengthen communities and advocate for what matters most to families with a focus on health security, financial stability and personal fulfillment. AARP also works for individuals in the marketplace by sparking new solutions and allowing carefully chosen, high-quality products and services to carry the AARP name. As a trusted source for news and information, AARP produces the nation’s largest circulation publications, AARP The Magazine and AARP Bulletin. To learn more, visit www.aarp.org or follow @AARP and @AARPadvocates on social media.