Millions of Americans rely on the medical expense deduction, nearly half of whom have incomes of $50,000 or less
Washington, D.C.—U.S. Senators Susan Collins (R-ME) and Maria Cantwell (D-WA) announced today that a provision they pushed for to assist families who are struggling to afford high medical costs was included in the appropriations package that passed the Senate today. The legislation now heads to the President’s desk to be signed into law.
For those households that spend more than 7.5 percent of their income on medical expenses, Senators Collins and Cantwell’s provision, which is based on the Medical Expense Savings Act they introduced earlier this year, would allow them to continue to deduct these costs from their tax bill when they file in 2020 and 2021.
Millions of Americans rely on the medical expense deduction. The burden of high medical expenses falls disproportionately on seniors and those with disabilities. The medical expense deduction is vital for those who have pre-existing medical conditions, suffer chronic medical conditions, experience unexpected illnesses or injuries, or face costs for long-term care services that are not covered by insurance.
“Medical debt is a serious challenge facing millions of families in our country, and as we endeavor to reduce health care costs, we should also make every effort to ensure that we lower their tax burden as well,” said Senator Collins. “My provision temporarily restoring the income threshold to 7.5 percent for all taxpayers became law in 2017, and the bipartisan legislation we passed today will extend this vital deduction to help improve the affordability of health care for nearly 20,000 Mainers and millions of Americans."
“More than 200,000 Washingtonians claim the medical expense deduction to lower their health care costs,” Senator Cantwell said. “Extending this provision will help families with high medical bills pay for unexpected medical costs and life-saving treatment.”
“The medical expense deduction provides important tax relief that helps offset the cost of acute and chronic medical conditions for older Americans, children, and individuals with disabilities,” said Megan O’Reilly, Vice President of Government Affairs at AARP. “For many, the medical expense deduction can help them manage their high out-of-pocket health care expenses including money paid for diagnosis, treatment, equipment, prescription medicine, long-term care services, and long-term care insurance premiums.”
Several years ago, the income threshold for taxpayers to deduct their medical expenses increased from 7.5 percent to 10 percent. In 2017, Senator Collins secured a provision to temporarily restore the income threshold for the medical expense deduction to 7.5 percent as part of the Tax Cut and Jobs Act, but it expired at the end of 2018. Now that Congress has taken action, taxpayers will be able to deduct medical expenses that exceed 7.5 percent of their income then they file their taxes over the next two years.
According to AARP, nearly 70 percent of taxpayers who will take the medical expense deduction in 2019 have an income of $113,000 or less. In Maine, 19,400 residents are eligible for this deduction. 4.4 million taxpayers will benefit from the medical expense deduction. A 2016 survey of cancer survivors showed that one-third go into debt and of those more than half incurred more than $10,000 in expenses.
Earlier this month, Senators Collins, Cantwell, Martha McSally (R-AZ), and Kyrsten Sinema (D-AZ) sent a letter to Senate leadership urging them to extend the medical expense deduction in any end-of-year funding package.