The proposed GOP Tax Reform Plan threatens to repeal laws that enable taxpayers to deduct medical and dental expenses on their tax returns. The current law allows taxpayers who itemize their taxes to deduct qualified medical expenses if the taxpayer spends more than ten percent (10%) of his annual gross income on such expenses. Under the proposed tax reform, this deduction will no longer be an option. The proposed tax reform affects Americans with high medical costs, many of whom are suffering from chronic conditions. Treatments for chronic conditions involves expensive medical devices and other necessary equipment. The Internal Revenue Service (IRS) defines medical expenses as cost of diagnosis, cure, mitigation, treatment, and prevention of diseases. The IRS also includes treatments affecting any part or function of the body as part of their definition of medical costs.
The elimination of the ability to deduct medical expenses affects seniors in nursing homes and assisted living facilities. Seventy-five percent (75%) of taxpayers who deduct medical expenses are 50 years old or older, and seventy percent (70%) of taxpayers who utilize medical deductions have incomes on average of $75,000.00. Most seniors in nursing homes and assisted living facilities rely on their own income to pay for the cost, and the continuous payments to these facilities can cost them tens of thousands of dollars a year. Caregivers of disabled children also will be impacted by repeal of any medical deduction. Disabled children usually require continuous expensive medical care and equipment similar to seniors and other adults with chronic illnesses.
Proponents of the tax reform, claiming that only a small percentage of Americans utilize the medical deduction, assert that the medical expense deduction is not necessary. While the IRS did report in 2015 that only 8.8 million of Americans claimed the deduction on their tax returns, those deductions totaled over 87 billion dollars during that same tax period.