Kaiser Health News, November 2, 2017
Julie Rovner

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The tax bill unveiled by Republicans in the House on Thursday would not, as had been rumored, eliminate the tax penalty for failure to have health insurance. But it would eliminate a decades-old deduction for people with very high medical costs.

The controversial bill is an effort by Republicans to revamp the nation’s tax code and provide dramatic tax cuts for business and individuals. However, its future is not yet clear because Republicans, who control both the House and Senate, appear divided on key measures.

The medical deduction, originally created in World War II, is available only to taxpayers whose expenses are above 10 percent of their adjusted gross income.

Because of that threshold, and because it is available only to people who itemize their deductions, the medical expense deduction is not used by many people — an estimated 8.8 million claimed it on their 2015 taxes, according to the IRS.

But those 8.8 million tax filers claimed an estimated $87 billion in deductions; meaning that those who do qualify for the deduction have very high out-of-pocket health costs. [...]

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