Tax Reform– Medical Expense Deduction Lives

Posted on: February 13th, 2018 by Lawrence A. Friedman

What a difference a few months can make!  On November 21, 2017, Mark Friedman, Esq. wrote a blog entry explaining that the then tax reform bill would eliminate the deduction for medical expenses creating major issues for many people.  As Mark noted,

“That’s a big deal for people in nursing homes, especially people in nursing homes on Medicaid with relatively high incomes.  That is because once you go on Medicaid, your income must be spent according to Medicaid rules. When you apply for Medicaid, the agency gives you a breakdown at the end that shows how you have to spend your income each month. For people without a spouse, usually all of your income must go to pay the nursing home or assisted living facility, with perhaps a small amount allowed to pay for health insurance.  There is no allowance to pay for taxes.”

Thus the tax reform bill would have created particular issues for families that liquidate IRAs and 401(k) accounts to fund long term care.

Mark ended his blog post by writing, “I hope that lawmakers will take this into account as tax reform progresses.”  Fortunately, Congress heard the uproar from elder law attorneys and other groups and eliminated that feature of tax reform.  In fact, the recent tax legislation temporarily expands the medical expense deduction.

To learn how this may affect you, make an appointment with Mark or me.  In the meantime,  a hearty toast to democracy in action.


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