JustCare

Tag: Congress

  • Congress may end tax deduction for medical expenses

    Congress may end tax deduction for medical expenses

    The House Republicans are proposing a tax bill that would end the tax deduction for medical expenses. This tax deduction benefits people whose medical spending represents more than ten percent of their adjusted gross income. Given high health care costs, almost nine million middle and low-income people benefit from the deduction; according to AARP, most of them are over 65.

    Sarah Kliff explains for Vox that out-of-pocket costs for health care services and prescription drugs, including deductibles,  as well as the cost of a joining a weight-loss club, are tax-deductible medical expenses as defined by the IRS. And, people who work for themselves can usually include the cost of their health insurance premiums as a tax-deductible medical expense if their total medical spending is more than 10 percent of their adjusted gross income.

    Unlike some tax deductions, many working families benefit from the medical expense deduction. Three percent of Americans with annual incomes under $20,000 take the medical expense deduction as compared to one percent of people earning $1 million or more. To put these numbers in context, in 2014, just over 60 million people, earned under $20,000 a year. About 130,000 Americans earned over $1 million in 2014.

    AARP is lobbying against the elimination of this tax deduction because it benefits millions of older people with high health care costs, including people needing long-term care. People with incomes under $20,000 who use the medical expense deduction claim an average of $9,136 in medical expenses.

    Bloomberg News reports that the Senate tax proposal keeps the tax deduction for medical expenses. The Senate Finance Committee will begin considering the tax proposal next week; it is not clear whether the medical expense deduction will ultimately stay or go.

    Whatever the future of the medical expense tax deduction, given the GOP control over both houses of Congress and the GOP desire to lower tax rates for the wealthy, the data suggest that the tax bill will drive up taxes for many middle and working class families.

    Here’s more from Just Care:

  • Social Security disaster averted in budget deal

    Social Security disaster averted in budget deal

    Here’s where your Social Security contributions go and how Congressional opponents of Social Security tried to dismantle it during the budget negotiations, according to Nancy Altman, founder of Social Security Works:

    1. The Social Security contributions deducted from your paycheck are premiums you pay to the U.S. Treasury Department for insurance if you lose your job because of death, disability or old age.
    2. For no good reason, the treasury department divides the money it gets into an old age and survivors insurance trust fund and and a disability insurance trust fund. But, the money can be allocated between the funds any which way and reallocated to keep the funds in balance.
    3. For no good reason, the Secretary of the Treasury does not have the authority to rebalance the funds when necessary.  It takes an act of Congress.
    4. Congress has rebalanced the funds 11 times, sometimes increasing contributions going to one fund and sometimes to the other fund.  As a result of an over-allocation to the disability trust fund, it was projected to run dry in 2016, during the election season. Without Congressional action, the benefit to people with disabilities–people like us who have been in a car accident or diagnosed with a life-threatening illness– would have been cut 20 percent by the end of 2016.  Today, the average benefit is $39 a day, and it is the primary or only income for about four out of five people receiving benefits.  Without the benefit, half would live in poverty.
    5. Some Republicans in Congress tried to keep Congress from readjusting the Social Security funds, wrongly claiming that social security disability insurance is broken even though the Office of the Inspector General found that less than one percent, about one in three hundred cases they looked at, involved fraud.  These opponents of Social Security lost only in part.
    6. Social Security Disability Insurance is now set to need funds in 2022, better than 2016. But, had Congress done its job, SSDI now would be financially secure until 2034. Moreover, the budget deal requires some monies to be diverted to address fraud that the Office of the Inspector General could not document. As a result, some workers will likely see their earned benefits delayed. No benefits were cut though and no eligibility rules changed.

    Now it’s time to expand Social Security benefits and to lift the cap on contributions for wealthy people. And, there are more than six bills in Congress intended to do that. Click here for information on how to apply for Social Security Disability Income.