GOP tax plan would eliminate medical expense deduction, keep ACA penalty

The Republican tax plan unveiled this week in the House would not eliminate the tax penalty for failure to have health insurance, but it would eliminate the deduction for people with very high medical costs (Source: “House Tax Bill Would Scrap Deduction For Medical Expenses,” Kaiser Health News, Nov. 2, 2017)

The medical deduction, originally created in World War II, is available only to taxpayers whose expenses are above 10 percent of their adjusted gross income.

Because of that threshold, and because it is available only to people who itemize their deductions, the medical expense deduction is not used by many people — an estimated 8.8 million claimed it on their 2015 taxes, according to the IRS. But those 8.8 million tax filers claimed an estimated $87 billion in deductions; meaning that those who do qualify for the deduction have very high out-of-pocket health costs.