House GOP Plan to End the Medical Expense Deduction

House GOP Plan to End the Medical Expense Deduction


The House GOP tax reform bill proposes to end the medical expense deduction. This deduction is available only for individuals whose medical expenses exceed 10% of their incomes.

About 8 to 9 million Americans use this tax deduction every year. Typically, it is used by seniors and the disabled paying for long term care in nursing homes or receiving home health services in their own homes. It is also used by individuals who in one year may face catastrophic medical expenses due to an accident or serious illness. It may also be used by families caring for a severely disabled child or grandparent.

It is unclear why the GOP singled out this particular exemption for elimination in light of the fact it has been in existence since the Second World War. A wide variety of medical expenses may qualify an individual for this exemption, including your insurance premiums, copays, deductibles, out of pocket, medical trasportation and uncovered medical costs.  The value of this deduction for tax payers is $11 billion in 2018 and $56 billion over the five year time frame from 2016 through 2020.

Given the GOP’s desire to eliminate the Affordable Care Act and cut $1.5 trillion from Medicare and Medicaid in their 2018 budget resolution, this makes no policy or political sense at all. If in fact they had a proposal in place to pay for catastrophic medical expenses for all Americans, it might make sense to eliminate this deduction as a way to pay for the expansion in health coverage. However the House GOP tax bill is primarily devoted to cutting the tax rates for large corporations and eliminating estate taxes and the alternative minimum tax for very wealthy individuals.

You should absolutely let your Congressperson know your views on eliminating this particular tax deduction as part of tax reform.


Prepared by: Lucien Wulsin

Dated: 11/7/17

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