There are a lot of elderly people who have a small amount of income and who receive long-term care. Most of these people have dementia. Most of their income comes from distributions for IRA’s, pensions, and social security. Right now, for a lot of them income barely covers their medical expenses.
Here’s the thing: their medical expenses are vast. But long-term care for dementia-related & chronic illnesses — which can go on for years and years — is not covered by Medicare. Medicare will only cover nursing-home-type expenses if the patient’s overall health is improving as a result of the care...and these patients are not getting better. A lot of these people only survive because basically all of their income goes to medical expenses, and since medical expenses are deductible, their taxes are minimized. Imagine getting an income of $75,000/year and spending $60,000 of that income on medical expenses. You’re OK if you can deduct the cost of the medical expenses from your income. But the GOP tax bill will eliminate the medical deduction. For elderly people this is huge. Where is the AARP on this bill? Where are the long-term-care lobbyists? Why aren’t they pulling out all of the stops to oppose this abomination?
The GOP is proposing to eliminate the medical deduction. But people in long-term care pay $5k, $6k, 7k *every month* — basically all their income — in medical expenses. A lot of the time they need help doing everything — eating, bathing, toileting, etc, etc — because of their age-related disability. So if they’re income goes from a net of $11,000 ($75,000 income less medical expenses of $5,000/mo or a total of $60,000 less personal exemption of $4,000-ish) +/- (taxes are not simple — & for the moment I’m ignoring the fact that the first 10% of medical expenses aren’t deductible) to a net of $63,000 ($75,000 income less new boffo GOP standard deduction of $12,000 less eliminated personal exemption)...these people are going to be *screwed*. In addition to the additional Federal Tax, they are going to be paying more in state taxes, especially in the high-state-income-tax states. This is because state income taxes use Federal income taxes as a springboard.
Income $11,000, Federal taxes paid: basically zero; State taxes, probably basically zero
Income $63,000 Federal taxes paid: more than $8,000; State taxes could easily double this number
How are these people going to survive? Answer...they’re going to spend down their assets until they qualify for Medicaid.
But, oh, wait...that’s going to be gone.
This GOP tax bill sucks in so many ways. If you live in one of the states with a wobbly Senator, please call them & tell them not to throw gramma under the bus. If you’re a member of AARP please call them and tell them to oppose this bill and why. If you’re *not* a member of AARP, please call them and ask them why the hell should you join their crappy organization if they can’t even stop this piece of monstrous legislation?
Here’s the AARP website: www.aarp.org
Here’s their “contact us” page: