What the new tax bill may mean for older adults

Photo: Neil Moralee via Flickr

What does the just-passed Republican tax bill mean for most older adults? It’s mostly bad news, advocates say. Many provisions are likely to lead to more out of pocket costs, an especially serious problem for those on fixed incomes.

Worse, according to a coalition of more than 50 advocacy groups, the new law now jeopardizes Medicare, Medicaid and Supplemental Security Income (SSI) benefits. It also puts at serious risk for future funding cuts a variety of home and community programs that enable older adults to age in place, as well as discretionary programs such as Meals on Wheels.

As Howard Gleckman writes in this Forbes article, some older adults won’t notice much of a change, at least at first. Low-income elders likely will see little immediate difference, those with moderate incomes may see average savings of $300 to $1,000. High-income earners and wealthy retirees are set to benefit the most from the tax changes.

Additionally, the law repeals the Affordable Care Act’s individual mandate, which is expected to cause an estimated 10 percent jump in insurance premiums for those in the 55- to 64-years age group. The Congressional Budget Office (CBO) estimates 13 million people will lose or drop their health coverage by 2027 without the mandate. Healthy younger people will likely drop out, leaving an older, sicker pool of higher cost consumers. That will lead to even higher premiums down the road, and force those in the pre-Medicare eligible population to make some tough financial choices, according to Jennifer Goldberg, an attorney with the advocacy group Justice in Aging.

The law also hurts seniors in high tax, mostly “blue” states, by capping deductions for state and local property taxes (SALT). Overall it adds nearly $1.5 trillion to the national debt. “That’s the biggest danger,” said Goldberg by phone. “An increase in the national debt will be the trigger for Congress to start cutting entitlement programs like Medicare.”

Goldberg said that programs funded under the Older American Act (OAA), including community-based care that keeps older adults out of nursing homes also are at risk. Although Congress reauthorized the OAA in 2016, legislators STILL must appropriate funds each year to pay for programs. “Any discretionary funding is at risk,” Goldberg said.

The proposed SALT cap likely will make it harder for states to increase revenue to pay for community-based services, she said. That will hurt everything from respite services to senior centers to state-funded programs providing in-home help with activities of daily living, as this story explains.

Cuts to popular programs like Meals on Wheels won’t sit well with older adults, caregivers, or advocates. You may recall the major kerfuffle last March when Office of Budget and Management Director Mick Mulvaney proposed eliminating funding for community services. Goldberg said the aging network will be out in force to stop any tinkering with much-needed programs.

Several other provisions which may help some seniors are included in the legislation, while others are eliminated. Deductions for medical expenses increase temporarily to 10 percent of income for 2017 and 2018. A tax credit of $500 is available for non-child dependents so that family caregivers may see a slight benefit. The standard deduction increases to $24,000 for a couple ($12,700 for an individual), however, the new law eliminates the personal exemption of $4,050 for each taxpayer and dependent. The special standard deduction for those over 65, blind or disabled disappears as well.

Cuts to senior programs can still be prevented, Goldberg said. “Older adults, caregivers, and advocates need to make their voices heard on the state and national level.” The potential for changes to our health system is very real, and a justification for cuts to Medicare down the road,” she warned. “It’s important to understand the threats older adults face, not only now, but for at least the next decade.”

Some observers predict Republicans may pay a hefty price for the bill during the 2018 election. Whether or not that happens, Goldberg said any changes to the health system will have a profound effect on older adults’ ability to access services.

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