In the coming days, a small group of Republicans will meet in Washington to try to settle a simple question: Should their revised tax bill eliminate a deduction for medical expenses and take away thousands of dollars each year from many people who are sick and, often, old?
The two competing tax bills that will form the basis of an attempt at compromise over the coming weeks, one from the House of Representatives and one from the Senate, answer the question differently. The Senate bill would keep a deduction for medical expenses intact. The House bill would kill it off entirely. The more money that people had to spend this year, the more they would lose next year if the House prevails and the deduction disappears.
Let’s meet those people.
Meet Medha Godbole, 58, whose 60-year-old husband, Sanjay, is paraplegic, nonverbal and incontinent. The Solon, Ohio, couple have about $130,000 in expenses for Mr. Godbole’s round-the-clock, in-home care. Loss of the tax break would cost them close to $30,000 annually.
Meet Conrad Wagner, 88, who spent his working years at the Veterans Administrationand then teaching at Vanderbilt University. He expects to spend about $200,000 this year on care and expensive equipment for his 87-year-old wife, Jane, who has a stomach condition that requires 24/7 help in their Nashville home.
Meet Kae Yates, who had to spend over $75,000 this year. Her husband, Reggie, is 77 and lives in an assisted living home in the wake of a stroke. She’s 72 and still has all the usual expenses for her own home and daily life in Claremont, Calif.
How many more are out there like them? The AARP Public Policy Institute, relying on the latest Internal Revenue Service data from 2015, notes that 8.8 million people take the medical expense deduction each year. Not all of them are older. Many children with special needs, for instance, have so many expenses that their parents end up qualifying for the deduction. Ditto sick or disabled adults with all sorts of maladies.
Still, about 55 percent of the taxpayers who claimed the deduction in 2015 were 65 and older, according to AARP. Also, 69 percent have incomes under $75,000.
The average amount that people claimed was $9,904, which makes the couples we’ve met up above outliers. But it stands to reason that people who need long-term care will spend some of the highest amounts, given the high cost of nursing homes and similar care. And because 52 percent of people who live beyond 65 will need some kind of extended care before they die, according to federal health data, these outsize expenses are the ones that we ought to focus on when considering which tax breaks we want to persist.
In an ideal world, any big new tax bill makes things simpler. Cutting deductions for medical expenses does make the year-end chore easier. But is it fair?
Read more at the New York Times.