The House GOP finally released a 429-page proposed tax bill that not surprisingly has critics – even among Republicans.

But at least one thing isn’t it in.

There was talk of drastically reducing the deductibility of 401(k) contributions from the current $18,000 a year to a limit as low as $2,400. In the end no changes were presented in the bill.

However, there is a change to the deduction for medical expenses, which the bill eliminates.

“While it’s not a widely used tax deduction — about 5 percent of tax filers claim it — for the old and sick it can be significant,” writes Bertha Coombs for CNBC.

On release of the bill, AARP Executive Vice President Nancy LeaMond said in a statement, ”As AARP evaluates the bill, we will be analyzing several areas of concern. For example, eliminating the medical expense deduction amounts to a health tax on millions of Americans with high medical costs – especially middle-income seniors. AARP is strongly opposed to this provision.”

Lydia Ramsey of Business Insider writes the medical expense deduction is “key for families with high medical costs, like those dealing with chronic conditions that require medical devices and other expensive equipment. Right now, those expenses can be deducted from their taxes, but under the Republican tax plan, they wouldn’t be able to. Under current law, individuals who spend over 10 percent of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction.

According to the IRS, medical expenses that taxpayers pay themselves include:
— The costs of diagnosing, treating, easing or preventing disease.

— Prescription drugs and insulin.

— Insurance premiums for policies that cover medical care.

— Some long-term care insurance costs.

As Julie Rovner wrote for Kaiser Health News: “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.”

David Certner, legislative counsel for AARP says in the Kaiser article that the organization “has calculated that about three-quarters of those who claim the medical expense deduction are 50 or older, and more than 70 percent have incomes $75,000 or below. Many of those expenses are for long-term care, which is typically not covered by health insurance. Long-term care can cost thousands or tens of thousands of dollars a year.”

The elimination of the medical expense tax break will “prove particularly damaging to the elderly, many of whom have traditionally relied on the deduction for a portion of their nursing home care to wipe out any income they use to pay those expenses,” wrote Tony Nitti for Forbes.

I’d like to hear what you think of the GOP tax plan. If it goes through as is, how would it impact you? Send your comments to

Your help is welcome
There are a lot of you who may have suggestions for how to help someone after reading their comments in this newsletter. In this space I welcome advice you help other readers. Send your comments to Please include your name, city and state.

Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Laura Granberry of Grand Prairie, Tex., wanted to rant about tax reform, writing, “The size of the national debt makes me doubt I’ll have a livable Social Security income when turn 67 — in 2036. Republicans keep promising to take away my federal retirement. The Thrift Savings Plan is my safety net. I’m close to contributing the maximum allowed and I’m budgeting for catch-up contributions when I’m eligible. My story is probably like many other Americans: I lost most of my retirement savings in 2008, which is when I lost my job. The only full-time employment I could find paid less than 50 percent of what I was earning in 2007. Halfway into my working years I was starting over. I would bet that most of the working class hasn’t completely recovered from the recession — with their savings emptied and debts increased. Now is not the time for tax increases disguised as tax cuts.”

John from Winston-Salem, N.C., is worried about long-term care insurance. “My wife and I have paid premiums for years, but last week in the Wall Street Journal saw an article discussing General Electric’s possible liability. Do carriers have sufficient reserves to pay future long-term-care claims?”

“The risk for GE and others is whether carriers that sold long-term care policies have adequate reserves to pay future claims,” reported Leslie Scism for the Wall Street Journal.

Long-term care insurance can cover the cost of nursing homes, assisted-living facilities and in-home care. In most cases, insurance will cover expenses for those who need help with daily activities such as eating, dressing and bathing, or who have a severe cognitive impairment such as Alzheimer’s disease.

Medicaid covers long-term care, but to qualify for the benefit, you have to be poor. Medicare — except in very limited situations — does not cover long-term care.

As Scism writes, “Long-term-care insurance took off in the early 1990s. The policies had strong appeal to older people, and many insurers thought they had the perfect product to profit from people’s concerns about becoming unable to care for themselves and outliving their savings. Some early versions of long-term-care policies provided lifetime benefits. But by the mid 2000s, many insurers were rapidly ratcheting back the benefits, concluding they had badly miscalculated how many people would file claims and how long they would draw benefits before dying, among other things.”

If you’re concerned about the financial health of your long-term care insurance company read this: What If Your Long-term Insurance Carrier Goes Bust

Tim O’Neill of Venice, Fla., had a question about leaving assets to heirs. He wrote, “Can you address a change in the tax code that will no longer allow heirs to value the inherited property when they receive it rather than the original value. That change will adversely affect millions of citizens. For example, if I bought a house for $40,000 30 years ago, but is now worth $250,000, and leave it to my children, under current law, when I die, the value of the house to them is $250,000 and no taxes are due.”

No need to worry. The bill makes a good thing even better. In 2018, the estate and gift tax exemption is slated to increase from $5.49 million for an individual to $5.6 million. ($11.2 million for a married couple.) Under the GOP’s new bill, that limit would increase to $10 million for an individual. The bill eventually calls for the estate tax to be eliminated by 2024

And the step-up in basis tax rule stays as is.

Not all are happy about the repeal of the estate tax, which largely benefits multi-millionaires and billionaires. Read: The Most Egregious Gift to the Wealthy In the Republican Tax Plan

And the cost of the repeal as reported by Ashlea Ebeling for Forbes: “The estate provisions would cost the Treasury an estimated $172.2 billion over the next 10 years, according to the Joint Committee on Taxation.”

Here’s something I think you may find interesting from the Center on Budget and Policy Priories: Ten Facts You Should Know About the Federal Estate Tax

For example, “only the estates of the wealthiest 0.2 percent of Americans — roughly 2 out of every 1,000 people who die — owe any estate tax,” according to the center.

So what do you think of the elimination of the estate tax? Send your comments to

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Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)

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