FORCE advocates for families facing hereditary breast and ovarian cancer in areas such as access to care, research funding, insurance, and privacy.
December 20, 2017
This morning, Congress finalized passage of sweeping tax reform legislation. If all goes as planned, the President is expected to sign the bill before Christmas. The plan has numerous components that will likely impact every taxpayer. We cannot address all of the implications but in regard to health care and the hereditary cancer community, the bill contains a mixture of positives and negatives.
Under the new plan: For the next 2 years (2017 and 2018 tax years), you can deduct out-of-pocket medical expenses that exceed 7.5% of adjusted gross income. It will go back to the 10% threshold for all taxpayers in 2019 so we encourage everyone to take advantage of this lower threshold while it’s available.
Some components of the tax plan will be detrimental to many of our constituents and potentially to our organization:
INDIVIDUAL HEALTH INSURANCE MANDATE
Currently: The Affordable Care Act has an individual mandate clause which requires people to buy insurance or pay a penalty unless they qualify for a limited number of exemptions.
Under the new plan: The penalty for not having health insurance is reduced to zero, which in essence, eliminates the individual mandate. This will likely result in fewer young, healthy people signing up for coverage, further destabilizing the individual markets. In addition, this change is expected to lead to insurance premium increases of about 10% per year for people who do not qualify for premium subsidies. The Congressional Budget Office (CBO) projects that 4 million fewer Americans will have health insurance in 2019 as a result of the individual mandate being eliminated, which will rise to about 13 million in the following 8 years.
MEDICARE & MEDICAID
The tax bill doesn’t include specific changes to Medicare and Medicaid, but budget analysts point out that the tax plan ultimately increases the federal deficit, which will trigger another law to kick in that requires cuts to federal programs. Together the Medicare and Medicaid programs accounted for about $1.25 trillion in federal spending in 2016, approximately 30% of the federal budget. As such, it is likely that these and other federal programs/agencies will be targets for deficit reduction efforts in the future.
Currently: About one-third of taxpayers itemize their taxes and take advantage of the ability to deduct donations to charitable nonprofit organizations.
Under the new plan: The standard deduction for individual taxpayers is doubled ($24,000 per couple / $12,000 per individual). While this is appealing, it will also reduce the number who itemize from about 1 in 3 taxpayers to about 1 in 20. You can only claim deductions for charitable donations if you itemize so this removes the tax incentive for an estimated $95 billion of charitable giving each year. The declines in giving could be devastating for nonprofits, including FORCE. One study estimates that annual charitable giving could decline by as much as $13 billion. The Tax Policy Center projects a reduction of giving between $12 billion and $28 billion. This comes at a time when we are seeing a significant scaling back of social services and safety net programs; the work of nonprofit organizations will be more crucial than ever.
The Bottom Line: If you typically itemize your taxes, escalate your 2018 giving. Take advantage of the opportunity to make and deduct charitable donations before the ball drops on New Year’s Eve.
FORCE will continue our advocacy work and efforts on behalf of the hereditary cancer community in the coming year. Stay tuned for updates on this and other issues.