The 2017 tax bill that has been in the news recently is nearing enactment as the House of Representatives and the Senate work to reconcile the differences between their versions of the bill through a conference committee. Once the conference committee reconciles the language, it will be voted on and sent to the president for his signature. The two versions of the bill include a number of provisions that, if passed, will impact the primary immunodeficiency (PI) community. The Immune Deficiency Foundation (IDF) will keep the community up to date, but below is an overview of how this bill will affect individuals and families living with PI.
Repeal of the Individual Mandate for Healthcare Coverage
Included in the Senate version of the bill is the repeal of the tax penalty for those who choose not to obtain healthcare coverage. With less young and healthy people likely to join the healthcare market to offset the costs, we expect the individual insurance market to become even less stable and result in further increases in premiums for those with chronic conditions who cannot go without insurance. The House version of the bill leaves the tax penalty in place.
Medical Expenses Deduction
Under the current law, taxpayers who itemize may deduct the cost of out-of-pocket medical expenses for themselves or dependents if these expenses exceed 10% of their adjusted gross income. This is helpful to people in our community who have very high medical expenses. The House version of the bill repeals this helpful deduction, whereas the Senate version lowers the expense threshold from 10% to 7.5%. If the latter passes, more people will be able to deduct their medical expenses. Therefore, IDF is urging that the medical expenses deduction be reduced to 7.5% of income.
Orphan Drug Tax Credit
Enacted in 1983, the Orphan Drug Tax Credit (ODTC) provides an incentive to generate industry interest in developing drugs to treat rare diseases and disorders like PI. It recognized that when a patient population is small, companies researching and developing treatments are not motivated to invest the time, talent and money necessary to develop such products. While immunoglobulin (Ig) replacement therapy was introduced before the ODTC, this credit supports the development of new treatments for the many types of PI. One form of PI, Adenosine Deaminase Deficient Severe Combined Immune Deficiency (ADA-SCID), can be treated with a gene therapy that received FDA orphan drug designation in 2009. Because the disorders are rare, tax incentives for companies to invest in gene therapy and other new treatments are essential to the PI community. The ODTC tax credit is cut in half in the Senate bill and eliminated in the House bill. IDF is working with other organizations, led by the National Organization for Rare Disorders (NORD), to urge the conference committee to support rare disease research and maintain this important credit.
It is likely that differences between the House and Senate versions will be reconciled and final votes on the tax bill will take place in the next several days. If a final bill is passed, IDF will inform the PI community of any provisions that will impact healthcare.
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