The deduction that allows people with very high medical costs toshrink their taxable income by subtracting some out-of-pocketmedical expenses was a moving target during the congressional debate this fall. Some lawmakerswanted to repeal it, but people with serious illnesses or who needlong-term care said that eliminating the tax break would be aserious financial blow.

Congress has come around to their way of thinking, at least fornow. The tax bill passed this month preserves and expands it.

Under the new law, people whose unreimbursed medical expensesexceed 7.5 percent of their adjusted gross income can claim adeduction for those expenses in 2017 and 2018. Then it is scheduledto revert to 10 percent for everyone, said Tara Straw, a seniorpolicy analyst at the Center on Budget and Policy Priorities, anonpartisan research institute in Washington, D.C.

That’s a lower threshold than current rules, which had required thatpeople’s medical expenses exceed 10 percent of their income to takethe deduction in 2017 if they’re younger than 65. For people 65 orolder, the threshold already was set at 7.5 percent.

Yet even at the lower threshold, relatively few people can takethe deduction because their medical expenses aren’t high enough,Straw said.

To start with, health insurance premiums for employer-sponsoredcoverage that many people pay for with pretax dollars generallydon’t qualify, she said. “For many people, their premium is theirbiggest medical expense, and for most people, it can’t be deductedas a medical expense.”

In 2015, roughly 8.8 million taxpayers took the medical expensededuction, according to the Internal Revenue Service.

The House version of the tax reform bill eliminated the medicalexpense deduction, setting off alarm bells among consumer advocatesfor seniors and others. Lawmakers initially maintained that taxbreaks such as the medical expense deduction weren’t necessarybecause their tax bill would provide so many other overall taxbenefits to families.

The Senate version of the bill included the medical expensededuction and moved the threshold to 7.5 percent, at the behest ofSen. Susan Collins (R-Maine), who was concerned about highhealth care costs for seniors.

For the final bill, lawmakers settled on the Senate version.

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