The Tax Cuts and Jobs Act passed by the Senate in the early hours of December 20, 2017 is the most extensive rewrite of the U.S tax code in 30 years.
With as much as $1.5 trillion in cuts to federal revenue, as part of this bill, several Republican lawmakers, including House Speaker Paul Ryan, have said they will be looking at cuts to entitlement reform in 2018 to help pay for the bill, that is, they will propose cuts to Medicare, Medicaid and welfare programs next year – programs on which many in our community rely for their survival and independence.
There have been some statements from House and Senate leadership, namely Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan in early December about ensuring that sweeping cuts do not occur, however, it is United Spinal’s job to remain vigilant on behalf of our membership and the broader disability community whatever 2018 holds for us and United Spinal will continue to be on the front lines both in Washington, DC, and across the country.
Tax cuts open the door for cuts to Medicaid, Medicare, Supplemental Security Income, and other services.
While neither the House nor Senate tax bill includes direct cuts to these services, cuts are expected to follow to pay for the $1.5 trillion added to the deficit due to the tax cuts included in these tax proposals. Medicaid and other disability services were the target of intense cuts over the summer through the various Affordable Care Act (ACA) bills proposed in the House and Senate. There is no doubt that these same services remain on the chopping block to help pay for the proposed tax cuts.
Repealing the “affordable” part of the Affordable Care Act.
Eliminating the individual mandate means 13 million people could lose health insurance, and premiums could increase by 10% on average. Tax Cuts and Jobs Act eliminates the individual mandate beginning 2019.
The individual mandate helps make health insurance affordable for everyone and protects individuals with pre-existing conditions from being denied health coverage and being forced into insurance risk pools with sub-par care and services. Without the mandate, insurance premiums may rise by 10%, which amounts to an increase of hundreds of dollars per year for nearly 7 million middle-income Americans and by over $1,000 per year for seniors, according to the Center on Budget and Policy Priorities (CBPP).
Eliminating the medical expense deduction for people with disabilities.
The Tax Cuts and Jobs Act provides that, for taxable years beginning after December 31, 2016 and ending before January 1, 2019, the threshold for deducting medical expenses shall be 7.5-percent for all taxpayers. Present law states that individuals may claim an itemized deduction for unreimbursed medical expenses, but only to the extent that such expenses exceed 10 percent of adjusted gross income.
If the medical deduction were eliminated, this would hurt people with disabilities and chronic medical conditions, older citizens with greater medical needs, and families with children who have congenital or genetic disorders. Almost 8.8 million households claimed the medical deduction in 2015. The average deduction claimed was close to $10,000 and the cost of deducting long-term care could be ten times that amount. If individuals with disabilities can’t deduct their medical expenses, many will likely need to draw down more resources from tax-deferred accounts. Distribution from this type of account is considered income. The more income reported, the more an individual’s Social Security benefit could be taxed.
Incentives for hiring persons with a disability called the Work Opportunity Tax Credit (WOTC).
The WOTC provides businesses with a federal tax credit for hiring people with disabilities, as well as others, including unemployed veterans. The current tax credit for hiring a person with a disability can be as high as $2,400 for a business. Kept in the Tax Cuts and Jobs Act.
Dependent Care Assistance Programs (DCAPs).
DCAPs are tax-favored arrangements by which an employer reimburses employees for dependent care expenses, make payments to third parties for care of employees’ dependents, or provide a dependent care facility for employees. Kept in the combined House and Senate report.