Update on Private Activity Bonds and Medical Expense Deduction Provisions in Tax Reform Debate

Dana Halvorson

As you know from previous AHCA/NCAL communications, on November 2, 2017, the Republican leadership of the U.S. House of Representatives introduced the Tax Cuts and Jobs Act. This bill proposes to eliminate the use of private activity and advance refunding bonds beginning on Jan. 1, 2018. 

The elimination of private activity debt instruments would significantly and adversely impact the ability for the majority of our not for profit members to fund new construction, infrastructure improvements, acquisitions and other capital expenditures for their operations, including skilled nursing, assisted living centers and many affordable housing projects (impacting our for-profit providers as well). The Tax Cuts and Jobs Act also includes repealing the medical expense deduction.

AHCA/NCAL joined an AARP-led Coalition to preserve the medical expense deduction.  AHCA/NCAL opposes both the elimination of private activity bonds, along with the repealing of the medical expense deduction. On November 9, the Senate Republicans released their own tax reform plan. This plan would preserve private activity bonds, but advance refundings would still be terminated after this year. 

The Senate proposal also preserves the existing medical expense deduction and enhances the standard deduction for the blind and elderly. Last Friday, AHCA/NCAL and several other national organizations that are part of the AARP-led Coalition sent a letter to the tax reform House and Senate Conferees on the medical expense deduction provision. As House and Senate negotiators continue to work to try to blend the legislation passed by each chamber, AHCA/NCAL will keep its members posted of any relevant updates.