Eliminating the Medical Expense Deduction Would Seriously Harm People Who Are Chronically Ill

Share Article

NAELA Anticipates Harmful Effect of Tax Code Change on Older Americans and People with Special Needs

www.NAELA.org

The problem is as much a practical issue as it is a policy one. Fundamentally, many individuals paying for these costs will not be able to pay for their care and federal income tax at the same time.

Yesterday, November 2, House Republicans introduced their plan to reform the tax code. The legislation calls for ending the medical expense deduction. The National Academy of Elder Law Attorneys (NAELA) anticipates this proposed change will cause major disruption to individuals and families trying to pay for the catastrophic costs of long-term services and supports (LTSS).

Read the bill text and NAELA’s “Overview of the Medical Expense Deduction for the Chronically Ill.”

LTSS provides assistance with Activities of Daily Living -- eating, transferring, bathing, dressing, and continence. In many instances, individuals who need LTSS must be placed in a nursing facility to receive 24-hour care. Conditions that may require LTSS include Alzheimer’s disease, Multiple Sclerosis, or spinal cord injury.

The tax code allows individuals to deduct qualified long-term care expenses if they are chronically ill, meaning those unable to perform two or more Activities of Daily Living without assistance, or who need constant supervision because of a severe cognitive impairment, such as Alzheimer’s disease.

These expenses are usually catastrophic, requiring many Americans to spend all of their income and to liquidate resources to pay for care. For instance, paying for nursing home care can quickly impoverish middle- and working-class Americans, costing a median of $97,000 a year for a private room.

According to NAELA President Hy Darling, CELA, CAP, “The problem is as much a practical issue as it is a policy one. Fundamentally, many individuals paying for these costs will not be able to pay for their care and federal income tax at the same time. Raising the standard deduction and lowering tax rates will not address the issue.”

Why wouldn’t increasing the standard deduction and lowering tax rates help? “Because many chronically ill Americans must pay all of their income towards care, and without the Medical Expense Deduction they could still have a tax liability that they cannot afford to pay,” explains Darling.

Put simply, eliminating the Medical Expense Deduction puts chronically ill Americans between a rock and a hard place. If these individuals cannot pay for the cost of LTSS, this could lead to eviction from their care facility. Yet paying for their care and not the increased tax creates an uncollectible tax liability. And, it likely would lead to an increased reliance on government programs. Many middle- and working-class individuals must “spend down” their resources to qualify for Medicaid. Without a tax subsidy, there is an increased incentive for people in need of care to participate in an already stressed federal/state program rather than assuming personal responsibility for their care or the care of their loved ones.

About NAELA
Members of the National Academy of Elder Law Attorneys (NAELA) are attorneys who are experienced and trained in working with the legal problems of aging Americans and individuals of all ages with disabilities. Upon joining, NAELA member attorneys agree to adhere to the NAELA Aspirational Standards. Established in 1987, NAELA is a non-profit association that assists lawyers, bar organizations, and others. The mission of the National Academy of Elder Law Attorneys is educate, inspire, serve, and provide community to attorneys with practices in elder and special needs law. NAELA currently has members across the United States, Canada, Australia, and the United Kingdom. For more information, visit NAELA.org.

# # #

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Abby Matienzo, Communications Manager
Visit website