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Helping Americans Afford High Health Care Costs

The rising cost of health care has been – and continues to be – an ongoing subject of political debate. More important, it is the topic of conversations at kitchen tables across the country. Every day, millions of Americans are struggling to pay for insurance premiums and copays, prescription drugs and treatments, medical equipment, and long-term care while still putting food on the table, covering the mortgage or rent, and paying the bills. Americans with high health care costs can get some measure of relief by taking the medical expense deduction when they file their taxes. But, unless Congress takes action, 4.4 million Americans who are sick and count on this deduction to afford their medical bills will face higher taxes next year.

The 2017 tax bill included a temporary provision which allowed individuals and families to deduct medical expenses that exceeded 7.5 percent of their income, as a way to lower their out-of-pocket health costs. But, beginning in 2019, tax filers may only deduct medical expenses that exceed 10 percent of their income, raising taxes for the millions of Americans who depend on it.

Approximately 39 percent of Americans who took the medical expense deduction this year are over 65 years old. That’s more than 1.7 million people. Even with Medicare coverage, older Americans are more likely to spend a lot on health care. In 2016, the average Medicare beneficiary paid about $5,680 out of pocket for things like premiums, prescriptions, doctor visit copays, medical supplies and equipment, and other things that Medicare doesn’t cover like dental care, home health, and nursing home care.

Keep in mind that the average median annual income for Medicare beneficiaries age 65+ is $26,000. SO, a senior with average income and average health costs is likely to spend around twenty percent of their budget on health care.

And, many older adults have much higher medical expenses. Americans age 85 and up spent an average of $10,000 out-of-pocket, driven largely by the costs of long-term care costs. The price tag for a private room in a nursing home can be more than $100,000 annually. Home-based care, while less expensive, can still cost more than $34,000 per year.

This isn’t only a problem for older adults. In 2016, Americans with Type I diabetes, 1.5 million people including about 193,000 under age 20, paid an average out-of-pocket cost of more than $5,000 per year JUST for their daily insulin. And, the cost to families dealing with cancer, long-term chronic conditions, and disabilities can be astronomical. The retail price of the cancer drug Revlimid is $719 for a single dose, pushing the cost of a full course of treatment up to nearly $200,000. A new breakthrough treatment for cystic fibrosis, for example, will have a sticker price of more than $300,000 per year!

AARP is urging Congress to take action before the end of the year on legislation that would permanently extend the 7.5 percent income threshold. We cannot let this measure fall between the cracks or become a political football. The issue at stake – helping families take care of their health and make ends meet – is too important. Taxes shouldn’t be going up for millions of Americans who are already sick or in need of long-term care.

Nancy LeaMond, AARP

Nancy LeaMond is the chief advocacy and engagement officer for AARP, widely seen as one of the most powerful advocacy organizations. Leading its government affairs and legislative campaigns, she has the responsibility of driving the organization’s social mission on behalf of Americans 50-plus and their families. She also manages public education, volunteerism, multicultural outreach and engagement, and she directs major AARP initiatives that include supporting family caregivers through advocacy, education and innovative programs, and expanding AARP’s local footprint in communities across the country.

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