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Life Health > Health Insurance > Health Insurance

Senators Float Seniors Tax Hike Prevention Act of 2017

By Melanie Waddell

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Sens. Rob Portman, R-Ohio, and Sherrod Brown, D-Ohio, introduced legislation Wednesday designed to protect seniors with high health care costs from a “health tax” in 2017.

The Seniors Tax Hike Prevention Act of 2017 (S. 1977) would allow for a two-year delay in the scheduled increase of the income threshold — to 10% from the current 7.5% — after which those age 65 and older can deduct medical expenses on their tax returns.

AARP CEO Jo Ann Jenkins gave a thumbs up to the bill. “If this needed, bipartisan legislation does not pass soon, older taxpayers with high health costs will face a 2017 health tax hike due to a reduced medical expense deduction,” Jenkins said in a statement. “The medical expense deduction helps millions of middle-income older Americans to offset high out-of-pocket health care costs.”

AARP, she continued, “supports this temporary delay as a necessary immediate step toward permanently restoring the tax threshold to 7.5% for older Americans with high out-of-pocket health care costs.”

While the overwhelming majority of Americans age 65 and older have Medicare coverage, beneficiaries still spend a large portion of their income on out-of-pocket health expenses, AARP said.

The average Medicare beneficiary spends about $5,680 out of pocket on medical care. Many older Americans face high costs for long-term services and supports, which are generally not covered by Medicare, as well as for hospitalizations and prescription drugs.

“Tax relief for middle income seniors with high medical costs provides needed financial resources,” the lobbying group said.

Citing recent IRS data, AARP noted that:

  • 56% of those taking the medical expense deduction were age 65 or older.
  • Nearly 31% of taxpayers age 65+ that claimed the medical expense deduction had annual income under $50,000.
  • Nearly 73% of people of all ages claiming the medical expense deduction had annual income under $75,000.

AARP urges “Congress to follow the lead of Senators Brown and Portman by enacting measures such as this that will help protect older Americans from high health and long-term care costs,” Jenkins said.

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