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Recognized Social Butterfly
Posts: 870
Registered: ‎09-03-2011

Re: What do you think about the impending health tax reform?

Message 51 of 59 (295 Views)

GailL1 wrote:

 How does AARP see this as affecting people negatively especially when such a large standard deduction will be put in its place?

 

 

Gail, What happens if that pipe dream of doubling the standard deductions never comes to pass this year or they don’t make it retroactive to 01/01/2017?

 

What then? Millions of people over 65 would have to try and itemize deductions that exceed 10% instead of 7.5% of their adjusted gross income. An extra $100 in taxes returned to a senior who has high out of pocket medical and nursing home expenses can be a great relief and morale booster. It’s a drop in the ocean compared to the earned income tax refunds given to taxpayers under 65.

 

Recognized Social Butterfly
Posts: 870
Registered: ‎09-03-2011

Re: What do you think about the impending health tax reform?

[ Edited ]
Message 52 of 59 (273 Views)

@GailL1, in life there are some things we don’t plan for, they’re unexpected. I think most of us hope that when our time comes we just simply drop over dead and then they bury us. Sure the answers to a successful life plan is out there in a text book for all to read, but sometimes economics, and other life commitments can prevent us from developing the perfect plan for a gracious death.

 

As to my friend he’s an educated railroader who had the appropriate advice and planning in place as best that someone in their positon could manage. It was Dementia not necessarily the cancer was the primary reason he had to put his wife in a nursing home and I’m sure hospice was there. You ask some good questions. But you have to trust that his eyes were dotted and his tees were crossed when it came to his financial situation. It is what it is for him. You have to spend down your resources first before you expect any more help in paying those medical bills. That's what he was doing.

 

That few extra tax dollars received back from the IRS for those who meet the 7.5% threshold of income to itemize may not be enough to  be of any real help to my friend but to some seniors it helps to pay a month’s insurance premium or co-pay on a prescription.

 

Valued Social Butterfly
Posts: 8,793
Registered: ‎08-18-2008

Re: What do you think about the impending health tax reform?

[ Edited ]
Message 53 of 59 (283 Views)

ReTiReD51 wrote:

I’m more likely to receive a response to an issue from one of my elected officials if I send it via an AARP campaign about an issue then when I do it on my own behalf. When people work together they are much more influential as a group.

 

One such issue “The Seniors Tax Hike Prevention Act” is personal to me because I’ve seen many seniors whom this Act would assist if only in a small way.

 

I know a 78 year old man who lost his 78 year old wife who had passed away from cancer in October 2015 after spending 8/9 months in a nursing home in 2015. He didn’t have insurance to cover the cost of the nursing home and he wasn’t able to care for her himself at home so he used their small 401k nest egg plus went into debt to pay for his wife’s 8 month stay in the nursing home. His next step would have been Medicaid. He’s worked his entire life and paid into the system and has used the system very little if any.

 

Now after her death he lost both the income coming in from her social security plus her small pension. So here he is, his household income has been significantly reduced plus he still owes the nursing home and other medical costs. He could end up having to sell his home if he hasn’t done so by now.

 

So to make a long story short he was able to itemize and use some of his medical deductions but that extra $300/400 whatever it was he got back in taxes was a drop in the ocean to what his health care debt is.

 

There’s only a small percentage of seniors who do itemize their deductions every year. But you never know when it could be me or you that fall into the same hardship and an extra $300/400 could come in handy and hey we’ve paid into this system our entire working life, what’s so wrong about getting a little something back from it.

 

There’s another true story about a late 70s something little lady with a shoebox full of medical receipts. She just couldn’t quite meet even the 7.5% threshold, it breaks my heart.


Appropriate planning means everything to an elderly person with assets, regardless of the source.  Appropriate knowledge is also a must when people find themselves in a problematic situation especially involving health issues.

 

In your example, I have to ask where was hospice?  Hospice works anywhere where a person lives.  It could have saved some cost or a lot of cost depending upon the situation.

 

I also ask where was the nursing home social working staff who should have been able to advise this person.  

 

There are also ways to handle retirement accounts - usually the case with 401Ks depending upon the wording in such a plan and the state rules for Medicaid.

A 401K asset is not in the legal term "their"'asset, it is one or the other's asset until one or the other dies.  When a RMD is started, the amount comes in the name of the person who saved the benefit.

 

Yes, when one of a couple dies, the social benefit income is reduced and thus appropriate planning is imperative.  In every pension benefit that I know about, when 1st signing up, you get a choice in how the benefits are paid - a larger amount if only for the beneficiary OR a reduced benefit if the election is made to keep covering the surviving spouse.

 

In general, I often find in situations such as this that there is no one to do the leg-work to help in special situations and advise the person on their best course of action.

 

Saving a little on a tax return is minute compared to what could be saved if state laws governing the Medicaid income test protecting the surviving member of the couple are written to protect them.  And that is the place where elder advocacy groups need to place their attention, IMO.

 

 

 

 

 

 

Recognized Social Butterfly
Posts: 870
Registered: ‎09-03-2011

Re: What do you think about the impending health tax reform?

Message 54 of 59 (282 Views)

I’m more likely to receive a response to an issue from one of my elected officials if I send it via an AARP campaign about an issue then when I do it on my own behalf. When people work together they are much more influential as a group.

 

One such issue “The Seniors Tax Hike Prevention Act” is personal to me because I’ve seen many seniors whom this Act would assist if only in a small way.

 

I know a 78 year old man who lost his 78 year old wife who had passed away from cancer in October 2015 after spending 8/9 months in a nursing home in 2015. He didn’t have insurance to cover the cost of the nursing home and he wasn’t able to care for her himself at home so he used their small 401k nest egg plus went into debt to pay for his wife’s 8 month stay in the nursing home. His next step would have been Medicaid. He’s worked his entire life and paid into the system and has used the system very little if any.

 

Now after her death he lost both the income coming in from her social security plus her small pension. So here he is, his household income has been significantly reduced plus he still owes the nursing home and other medical costs. He could end up having to sell his home if he hasn’t done so by now.

 

So to make a long story short he was able to itemize and use some of his medical deductions but that extra $300/400 whatever it was he got back in taxes was a drop in the ocean to what his health care debt is.

 

There’s only a small percentage of seniors who do itemize their deductions every year. But you never know when it could be me or you that fall into the same hardship and an extra $300/400 could come in handy and hey we’ve paid into this system our entire working life, what’s so wrong about getting a little something back from it.

 

There’s another true story about a late 70s something little lady with a shoebox full of medical receipts. She just couldn’t quite meet even the 7.5% threshold, it breaks my heart.

Valued Social Butterfly
Posts: 985
Registered: ‎01-02-2012

Re: What do you think about the impending health tax reform?

[ Edited ]
Message 55 of 59 (307 Views)

WebWiseWoman wrote:

"How does this work out for real people... as opposed to the millionairres that belong to AARP?"

 

Wait, what, hunh????? I joined AARP 12 years ago on my 50th b-day (literally joined at 12:00:01 AM on that day), when I was making probably $20K. I found the "secret menu" the next year booking AARP National meetup (sadly no longer happening): $250 (at that time) for lifetime membership! Renewed Mom's at lifetime as well (she survives on <$800 SSI only, as SS was not around for the first 20 years she worked). On each siblings' 50th, that is their b-day gift from me (most recently last January).

 

None ever thought we'd be millionairres; just happy, safe, sane and productive. And that is what we are. Until recently when our world was changed by the current Administration that tweets, bullies and shames but does nothing productive (so far).

 

To be fair, when the "Affordable Care Act" was proposed, me, being the dummy I am, thought it meant bringing health care costs in line (e.g.. it cost a total of $5K for broken wrist with 1 emergency care visit and 3 office visits [xray/cast, xray, xray/cast removal]); not about insurance. But remember I grew up in the time Insurance was the nickels, dimes and pennies my g-mom put in the life-insurance envelope next to the door for when that man came around.

 

Bottom line, as mother of 2 survivors and their step-sis of 1-Oct, worry about the anger in this world and forum. For 2 weeks I could not get out of bed on time; hated EVERYONE except my family and adopted-family members. It was the most awful time of my life, even post 9/11...

 

Your blanket statement troubles me; I hope you'll reconsider or not be here.

 


Huh? Do you have any opinion on tax reform, which was the question in chrono comment 1? I find your comment very hard to follow but I do not see the words "tax" or "medical expense deduction" anywhere in it, and that's the subject here.

 

As for your first sentence about my sentence about "millionairres," perhaps you do not understand the technique of using irony to make a point. The point -- and I gave four specific examples -- is that almost all seniors are helped by the rumored tax reform proposal, especially most of us who are middle class. The one group that might not be helped is very sick rich people... but it is AARP's longstanding position (as with all lefties) that rich people suck anyways so to hell with them.

 

Meanwhile, most of we seniors who are in the middle class -- either on private Cadillac insurance or public Part C -- are harmed by AARP's position on this subject as well as by AARP's position in favor of expensive private Medicare supplement insurance and many of its other half-baked left wing ideas. That's because -- as Gail wrote -- the Obamacare law changed the Schedule A medical expense deduction so that it is very little help to almost all seniors.

 

I cannot decipher the rest of your comment but I think you are saying in the last sentence that unless people agree with you they cannot speak (or in this case, comment).  Yes, that is another favorite left-wing AARP position.

Regular Social Butterfly
Posts: 424
Registered: ‎05-25-2009

Re: What do you think about the impending health tax reform?

Message 56 of 59 (329 Views)

"How does this work out for real people... as opposed to the millionairres that belong to AARP?"

 

Wait, what, hunh????? I joined AARP 12 years ago on my 50th b-day (literally joined at 12:00:01 AM on that day), when I was making probably $20K.

 

I found the "secret menu" the next year booking AARP National meetup (sadly no longer happening): $250 (at that time) for lifetime membership!

 

Renewed Mom's at lifetime as well (she survives on <$800 SSI only, as SS was not around for the first 20 years she worked).

 

On each siblings' 50th, that is their b-day gift from me (most recently last January).

 

None ever thought we'd be millionairres; just happy, safe, sane and productive. And that is what we are. Until recently when our world was changed by the current Administration that tweets, bullies and shames but does nothing productive (so far).

 

To be fair, when the "Affordable Care Act" was proposed, me, being the dummy I am, thought it meant bringing health care costs in line (e.g.. it cost a total of $5K for broken wrist with 1 emergency care visit and 3 office visits [xray/cast, xray, xray/cast removal]); not about insurance.

 

But remember I grew up in the time Insurance was the nickels, dimes and pennies my g-mom put in the life-insurance envelope next to the door for when that man came around.

 

Bottom line, as mother of 2 survivors and their step-sis of 1-Oct, worry about the anger in this world and forum. For 2 weeks I could not get out of bed on time; hated EVERYONE except my family and adopted-family members. It was the most awful time of my life, even post 9/11...

 

Your blanket statement troubles me; I hope you'll reconsider or not be here.

 

Thank you,

 

#VegasStrong

Phil Harris, actor and showman, to John Fogerty of CCR: “If I’d known I’d live this long, I’d have taken better care of myself.”
Valued Social Butterfly
Posts: 985
Registered: ‎01-02-2012

Re: What do you think about the impending health tax reform?

[ Edited ]
Message 57 of 59 (346 Views)

AARPTeri wrote:

AARP is fighting to stop Congress from hitting seniors with a health tax that would cost them thousands more out of their own pockets, millions of seniors would struggle to afford their medicine, and be forced to dip into their hard-earned retirement savings. Seniors depend on the health tax credit to pay for their prescriptions, doctors and hospitals, hearing aids and glasses and more. We need Congress to return medical expense deduction income threshold to a lower rate. What do you think about the impending health tax reform?”


I think your position is absurd. And I think your wording is absurd. Eliminating a Schedule A tax deduction  is not a "health tax reform" The rumored proposal is to eliminate almost all Schedule A tax deductions but in return to double the standard deduction in its place. If that rumor is true, the doubling of the standard deduction more than makes up for using the medical expense deduction on Schedule A and then some for almost all seniors.

 

This is especially true because starting January 1, 2017 even a person over 65 cannot deduct medical expenses except those that exceed 10% of adjusted gross income (it had been 7.5% for seniors through December 31, 2016 but that special break has been eliminated and the deduction only kicks in over 10% for everyone).

 

How does this work out for real people... as opposed to the millionairres that belong to AARP? Just on the back of an envelope

  • -- About 33% of we seniors are not rich but get sweetheart deals for Cadillac health insuance from former employers, pay very little in insurance premiums, and get our healthcare with low or no copays. Some of us even get our Part B premiums paid for by the former employer. We have never had anywhere near enough healthcare expense to use the Medical expense deduction on Schedule A. Doubling the standard deduction might wipe out our Federal tax altogether (unless we have Cadillac pensions too).
  • -- About 17% of we seniors are on Medicaid and have no health expenses period (not to mention the fact that we don't have enough income to even file Federal income taxes)
  • -- About 30% of we seniors buy public Medicare Part C premium support health plans. We are typically middle class and lower middle class, but our out of pocket medical-services expenses are capped by public Part C, usually at around an average $3500. If we paid the average $70 for the Part C plan with a $3500 MOOP and the average Part B premium, we paid about $2000. On the other hand if we took a risk and chose a zero-premium Part C plan, we have lower premium costs and a higher MOOP limit  but the two amounts come out the same on average BUT ONLY IF WE HAVE A BAD YEAR. So worst case (happens to one in 500 people maybe), we have $5500 in medical expenses. Under current law we'd have to make less than $40,000 in pension and SS for the health deduction to matter (assuming charitable dontations are still deductible as proposed). But if we made around $40,000 under the rumored plan with the standard deduction doubling we'd have almost no Federal tax liablity when adding exemptions and such and would pay the minimum 10% rate on whatever piddling amount is left to be taxed. Except for the rare person that gets to the OOP limit, the vast majority of us are much better off. And no one gets to the OOP limit every year (and lives to tell about it)
  • -- The rest of we Seniors are rich. Who cares right? That's what you leftists always tell us about rich people. For example, if I were making $70,000 plus in pension and SS, under current law my medical expenses would have to exceed about $8500 a year to be meaningful as a Schedule A deduction. But that kind of expense would mean I'm so sick or injured that taxes are not my major concern. If I'm part of the part of this rich group making more than $100,000 in retirement, I could care less about all of this stuff. That's what my lawyers, accountants and financial advisors are for

 

And do you have some special knowledge that not all of the Schedule A medical expense deduction will be eliminated? If you are right, then the effect on seniors would be less of an issue than in my back of an envelope calculations.

Valued Social Butterfly
Posts: 8,793
Registered: ‎08-18-2008

Re: What do you think about the impending health tax reform?

[ Edited ]
Message 58 of 59 (331 Views)

AARPTeri

Beginning with the tax return which people over 65 will file for this year (2017) their medical deduction has to exceed 10% of their adjusted gross income to be deductible and the overage is ALL that is deductible.  This is UP from previous years when it was  7.5% of their AGI.

 

All of this is a result of the passage of the ACA.  People who were less than 65 had this increase several years ago.  People over 65 were exempt from this increase until January 2017.

 

So this is already in play - courtesy of the ACA.

 

The Standard Deduction for 2017 is 

single. $6350

MFJ.    $12,700

 

Add to that the extra exemption which one gets for being over 65

single.  $6350 + $1550 = $7900

MFJ.     $12,700 + $2500 ($1250 each if both are over 65) = $15,200

 

And even another exemption amount if a person is blind according to the government definition.

 

If a medical deduction is most of what they have in itemized deduction,  the standard deduction + the extra ones for being over 65 and possibly the one for the blind,might possibly come out better.

 

According to the tax reform as I understand it, the standard deduction will be close to double while giving up some itemized deduction.  That means the standard deduction would go to around

single.   $12,000 +

MFJ.     $25,000 +

 

I think everybody would have to figure this for themselves - I know which way I would pick since it has been a very long time since I had enough dollars in itemized deductions to even consider itemizing.

 

Personally, I think AARP should lobby for that extra (over 65 and/or blind) exemption amount to stay or something equitable in the reform but I like the sound of the reform and hope all itemized deductions go away.  Most of them don't benefit the middle class as much as they do for those who make upwards of $250,000+ .

 

It seems that advocacy groups can just try to scare people just by saying something is being taken away but without description of what might come in its place.

 

How does AARP see this as affecting people negatively especially when such a large standard deduction will be put in its place?

Does AARP have any data on how many people, in the age group they represent , itemize their deductions ?

 

I came back to add this Forbes link to the announced 2017 tax rates, standard deductions and exemptions - in case somebody wants to do a little tax planning.

https://www.forbes.com/sites/kellyphillipserb/2016/10/25/irs-announces-2017-tax-rates-standard-deduc...

 

 

 

 

 

 

 

 

 

Community Manager
Posts: 1,493
Registered: ‎10-09-2007

What do you think about the impending health tax reform?

Message 59 of 59 (349 Views)

AARP is fighting to stop Congress from hitting seniors with a health tax that would cost them thousands more out of their own pockets, millions of seniors would struggle to afford their medicine, and be forced to dip into their hard-earned retirement savings. Seniors depend on the health tax credit to pay for their prescriptions, doctors and hospitals, hearing aids and glasses and more. We need Congress to return medical expense deduction income threshold to a lower rate. What do you think about the impending health tax reform?”

AARPTeri