Currently the value of Medicare and other in-kind benefits such as housing or food assistance are not taxed. Several past tax reform proposals would have taxed some part of Medicare’s insurance value. Unlike Social Security, Medicare is not cash income. Aside from the complexities of valuing the benefits accurately, the policy would require taxpayers to make monetary payments on nonmonetary income.
Taxing Medicare and In-Kind Benefits: Policy
AARP opposes any attempt to tax the actuarial value of Medicare or the value of other in-kind benefits because it would set an undesirable precedent and could impose a serious hardship on those who otherwise would not pay income taxes.