A Tax Hike Is Looming for Some Seniors in 2017. Here’s How Congress Can Stop It

aspirins make a sad face on a tax form
Charles Knowles

It may not seem like it for many Americans, but recent health care spending in the United States has been growing at historically low levels. Between 2000 and 2007, per capita health spending grew at an average annual rate of 7.55 percent. Then we saw a steep decline between 2008 and 2014, when the rate dropped to an average 3.2 percent per year.

Many Americans, however, may be scratching their heads because they notice the effect health care costs have on their family budgets. That is because more of the burden for out-of-pocket costs is falling on the consumer, where the average deductible for an employer-provided health plan surged nearly 9 percent in 2015 to more than $1,000. In fact, consumers have seen their out-of-pocket costs nearly double since the 1970s. For these reasons and more, AARP is working to reduce the percentage of income currently allowed for those 64 and under to deduct medical expenses on their tax return and also to make sure the threshold point does not increase for the 65 and older, which it is set to do on Jan. 1, 2017. [1]

AARP has endorsed HR 3590, bipartisan legislation introduced by Reps. Martha McSally (R-Ariz.), Kyrsten Sinema (D-Ariz.) and 12 other members of the House of Representatives. Known as the Halt Tax Increases on the Middle Class and Seniors Act, it would roll back the threshold for the ability to deduct medical expenses from its current 10 percent of income for Americans under 64 years old. The bill also would prevent a scheduled tax increase from taking effect for those 65 and older, when next year the threshold would increase from its current 7.5 percent of income to 10 percent. Depending on the year, between 8 million and 10 million Americans claim this deduction on their tax returns, almost three-quarters of whom reported less than $75,000 in income.

AARP supports this bill as a step in the right direction to restore needed tax relief for Americans with high out-of-pocket health care costs. According to preliminary 2013 IRS tax data, about 52 percent of those claiming the medical expense deduction earned $50,000 per year or less.

AARP believes every effort should be made to keep the threshold for the medical expense deduction as low as possible to help protect people with high health care costs. This is consistent with our long-stated goal to increase health care access and affordability for all Americans, especially those age 50 and older who tend to have higher health care expenses.

We will continue to work with the bill’s sponsors to pass this legislation into law. In the meantime — and of particular interest during tax season — the IRS lays out here all of the medical expenses for which you can claim a deduction.

[1] Section 213(a) of the Internal Revenue Code of 1986



Joyce Rogers, AARP

Joyce Rogers is AARP senior vice president for government affairs. A highly respected and recognized leader in government affairs and advocacy with over 25 years of experience, Joyce leads all federal and state advocacy efforts for AARP. Prior to coming to AARP, Joyce was a partner at Williams & Jensen, a Washington, D.C.-based government affairs law firm.

You can follow her on Twitter @JoyceAnn88 .

Andrew Schwab is a senior legislative representative with AARP Government Affairs. Andrew’s area of expertise is private health insurance including Medicare Advantage, Medicare Supplemental Insurance, the Affordable Care Act and employer-sponsored health insurance.

You can follow him on Twitter @AndrewSchwabNJ .


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