Efforts to have Congress make permanent the 7.5 percent threshold for the medical expense deduction accelerated this week as a letter from the Medical Expense Coalition was sent to lawmakers. The American Health Care Association and the National Center for Assisted Living (AHCA/NCAL), along with 48 other organizations, are signed onto the effort, which is led by AARP.

In the letter, these groups request that lawmakers become co-sponsors of the Medical Expense Savings Act (S 110/HR 2017), a bipartisan bill that would make permanent the 7.5 percent threshold for the medical expense deduction.

“We also ask you to support an extension of the 7.5 percent threshold in an end-of-year legislative package,” the letter said. “Without action, 4.4 million Americans with high medical costs will face an unexpected tax increase when they file their returns in the coming months.”

Of note, the coalition said that for more than 75 years, Americans with high health care costs have been able to deduct medical expenses from their taxes. And, for the millions of Americans who annually take this deduction, it provides important tax relief that helps offset the costs of acute and chronic medical conditions.

“This includes costs associated with long term care, assisted living, and nursing homes. These families are often struggling with high deductible co-pays and out-of-pocket expenses related to prevention, diagnosis, treatment, equipment, qualified long term care service costs, and long term care insurance premiums,” the letter said.
Some 70 percent of the taxpayers who claim this deduction have incomes between $23,100 and $113,000 per year, and the immediate tax increase they face will make their health care less affordable.

“Even for those people who are covered by Medicare, beneficiaries spend a large portion of their income on out-of-pocket expenses. The average Medicare beneficiary spends about $5,680 out of pocket on medical care,” the letter said.

In addition, older Americans often face high costs for long term services and supports, which are generally not covered by Medicare, as well as hospitalizations and prescription drugs.

“Tax relief in this area can provide needed resources, especially important to middle-income individuals with high medical costs,” the letter said.

AHCA/NCAL and the others also urged the legislation’s inclusion in any end-of-year legislative package.