House Approves Deduction For Long-Term Care Insurance | AccountingWEB

House Approves Deduction For Long-Term Care Insurance

By a vote of 362-61, the House of Representatives has approved a measure to provide an above-the-line tax deduction for long-term health care expenses, such as nursing home costs. Under current law such expenses are allowed as a tax deduction only to taxpayers who itemize deductions and then only to the extent that such expenses, combined with other deductible medical expenses, exceed 7.5% of the taxpayer's adjusted gross income.

It is estimated that the tax cut will provide $5.3 billion in savings to taxpayers over the next 10 years. Only taxpayers in lower tax brackets will qualify for the deduction. Individual taxpayers with adjusted gross income between $20,000 and $40,000, and married taxpayers who file jointly and whose adjusted gross income is between $40,000 and $80,000 will qualify for the deduction. The deduction, if made into law, will be phased in over 10 years.

It is the hope of the members of Congress that passage of this bill will encourage taxpayers to purchase private insurance and rely less on the federal Medicare and Medicaid programs. "If we don't put incentives in for individuals, our public funds will be depleted," said Representative J.D. Hayworth (R-AZ), sponsor of the bill.

Other provisions of the bill include a tax deduction for the care of a dependent in a taxpayer's home and expanded access to Archer Medical Savings Accounts (MSAs).

Dissenters of the bill, such as Representative Fortney Stark (D-CA) claim the bill is not designed to help taxpayers as much as it is designed to "bail out the insurance industry."

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.