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."

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.