The Internal Revenue Service (IRS) recently issued a notice explaining that taxpayers can use high-deductible health plans (HDHPs) to cover costs resulting from treatment for the new coronavirus.
What are HDHPs?
HDHPs are Federal Employees Health Benefits Program plans that allow the beneficiary to combine Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs) with traditional medical coverage to save for medical expenses. One of the biggest incentives is the potential for large tax savings.
Generally, these plans require beneficiaries to meet an annual deductible before benefits cover services other than in-network preventative care services.
How do these plans handle costs related to COVID-19 care?
As noted by the IRS, the plan extend to cover COVID-19 related costs of medical care without potential repercussions. The agency also specifically states that in the event a vaccination is developed, HDHPs will also cover the cost of these vaccinations as they would be considered a measure of preventative care.
Why is this important?
HDHP plans generally require beneficiaries to have no disqualifying health coverage in order to qualify for the plan. This statement clarifies that coverage related to care for the new coronavirus will not cause a problem with a beneficiary’s eligibility into the program.
The agency also notes those who participate in other health plans are wise to reach out to their provider if they have questions about their specific plan.
Why does the IRS care?
These plans offer tax incentives. Any action that jeopardizes a beneficiary’s enrollment in this plan can result in the loss of the tax advantages that come with participation. As such, the IRS likely felt it wise to provide guidance and reassurance to beneficiaries in light of the recent pandemic.