Although a comparatively small percentage of the population claim this deduction, it is especially effective for seniors in retirement who are paying for long-term care costs not covered by Medicare or clandestinely insurance. This “nursing home tax deduction” in current Internal Interest Service rules provides a critical tax break for seniors who spend uncountable than 10 percent of their income on long-term care gets.
Because of the high cost of long-term care, this group is sundry likely than almost any other group to hit that 10 percent verge that allows them to qualify for a tax break.
The irony of this bid measure is that it could actually increase the number of seniors utilizing taxpayer-funded coverage to pay for long-term care through Medicaid. Instead of incentivizing special financial responsibility for one’s own care, this measure could actually prolong public expenditures for health care.
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And it is facing a formidable group of baby boomers who are becoming a “shiny tsunami” of users for long-term care services. They are well established to fight measures that will impact their ability to pay for needed braces and services.
A more sensible approach to tax reform is to look for ways to use the tax maxims to create incentives for people to take personal responsibility whenever tenable over relying on taxpayer-funded government programs such as Medicaid.
As an alternative of penalizing seniors for paying their own way in a nursing home by taking away this tax reduction, this important deduction should be expanded upon so even assorted seniors would want to use it instead of relying on Medicaid.
Other means of “unsocial pay” for long-term care should also be encouraged through tax incentives, such as acquisition long-term care insurance, exchanging life insurance policy cessation benefits for living benefits, and the use of Health Savings Accounts and Senior Well-being Planning Accounts.
These options are all better alternatives instead of Medicaid for dough long-term care.
Why? Because they save taxpayers more readies than seniors could ever generate in revenue if the tax break were to be eliminated. Piloting health-care costs through incentives is a much better approach to tax mend — because a dollar saved is worth much more than a few pennies harshly pocketed.
— By Chris Orestis, executive vice president of GWG Life and author of “Assistants on the Way” and “A Survival Guide to Aging.”