At Work

More irrational spending related to health care

Who cares what it costs, if it’s related to health care, somebody else should pay πŸ€‘πŸ€‘πŸ€‘ in this case your children and grandchildren should pay. With today’s high deductible health plans this means that a whole lot of middle class Americans will have a new deduction in their income taxes. 

From the Congressional Budget Office.

Under current law, individuals may generally claim an itemized deduction for unreimbursed medical expenses to the extent that such expenses exceed a threshold of 10 percent of adjusted gross income (AGI). For taxpayers 65 years of age or older, the threshold is generally 7.5 percent in 2016, but it rises to 10 percent thereafter. Regardless of the age of the taxpayer, the threshold is 10 percent for the purposes of the alternative minimum tax (AMT). 

H.R. 3590 would amend the Internal Revenue Code to permanently lower the threshold from 10 percent to 7.5 percent of AGI under the regular income tax, regardless of the age of the taxpayer, effective for tax years beginning after December 31, 2015. H.R. 3590 maintains the threshold at its current-law level of 10 percent for AMT purposes.

The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 3590 would reduce revenues by $32.7 billion over the 2016-2026 period.

CBO and JCT estimate that enacting the bill would increase net direct spending or on-budget deficits by more than $5 billion in at least one of the four 10-year periods beginning in 2027.

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