Cost Projection, Legal Support, Medical Consultation

What Current Tax Reform Might Mean for Individuals with Disabilities, Injury, or Illness

 December 7, 2017

By  Deborah L Weiner Katz, OTR/L, CCM, CLCP

We are often too engaged with our work to discuss politics. That does not mean that our work is not affected by politics. Both the House of Representatives and the Senate have proposed tax plans that are moving simultaneously through Congress. Both contain tax changes that will affect families with members who are disabled. The key details have been left to tax committees, the House Ways and Means Committee and the Senate Finance Committee. Now, the House’s tax plan and the Senate’s tax plan must be reconciled in order for final changes to be made.


The House’s Tax Plan

The House’s tax plan will eliminate many current deductions. The most significant, as far as we are concerned, would be the medical expense deduction. This will affect those paying the most for medical care.

At present time, medical expenses can be deducted from income taxes as long as they add up to more than 10 percent of adjusted gross income. This includes expenses such as health insurance premiums, deductibles, high-cost drugs, home health care costs and nursing home fees. More specifically, the current plan covers the costs of modifications made to the homes of those with the disabilities, as well as the cost of travel to medical appointments. Medical expenses for immediate family members, in-laws and anyone who has lived in the household for a year.

This proposed bill will also cut corporate tax rates. The Republican-led House believes that this will unleash huge economic growth that will result in higher tax revenue. If this does not occur, a reduction in tax revenue can lead to extreme cuts in government spending, an increase in budget deficits, or both. This can mean cuts to Medicaid, Medicare, Section 8, Meals on Wheels and other programs that are essential to seniors and individuals with disabilities.

The Senate’s Tax Plan

The Senate plan preserves the medical expense deduction while delaying corporate tax cuts. According to Sen. Orrin Hatch, chairman of the Finance Committee, the plan will reduce individual tax rates across the board and provide substantial relief to low- and middle-income families and workers. Corporate rates will be drop but not until 2019. The overall cost of this tax cut package is lower than the House plan.

The Difference

The key sticking point is the corporate delay. Both Republicans and Democrats share the goal of bringing down corporate tax rates but have yet to reach a compromise. One major point of contention is still President Obama’s 2010 Affordable Care Act.

Rep. Mark Meadows believes that the price to pay for preserving certain tax cuts is to repeal the ACA mandate that requires people to have health insurance. The Congressional Budget Office has stated that this change would reduce deficits by $338 billion over the next decade. This might also lead to 13 million fewer people with insurance in 2027 and higher rates for those who remain in government-managed exchanges. The ramifications for individuals with disabilities, those with high medical expenses due to injury or illness and their families are of great concern to us.

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