The IRS announced that high-deductible health plans (HDHPs) can pay for coronavirus (COVID-19) testing and treatment without jeopardizing their status as an HDHP. This also means that anyone with an HDHP that covers these costs before plan deductibles have been met can still contribute to a health savings account (HSA) and deduct those contributions on next year's tax return.
One of the many advantages of HSAs is that you can deduct your contributions to the account—even if you don't itemize (although there are limits to how much you can contribute each year). However, in order to contribute to an HSA, you must also be covered under an HDHP.
A health plan must satisfy many requirements to be considered an HDHP. For instance, it must have a minimum annual deductible. An HDHP may, however, provide preventive care benefits without a deductible or with a deductible that is less than the minimum amount.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Under normal conditions, providing non-preventive health benefits without a deductible, or with a deductible below the minimum, would nullify a health plan's status as an HDHP. However, the IRS is disregarding this rule to eliminate potential administrative and financial barriers to testing for and treatment of COVID-19. The IRS also noted that, as always, any vaccination costs count as preventive care and can be paid for by an HDHP.
-
Take Charge of Retirement Spending With This Simple StrategyTo make sure you're in control of retirement spending, rather than the other way around, allocate funds to just three purposes: income, protection and legacy.
-
Here's How To Get Organized And Work For YourselfWhether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
New Law Delivers Tax Breaks to Natural Disaster Victims, But Is It Enough?Tax Relief The legislation provides critical tax relief to thousands of natural disaster victims across the country.
-
On the Naughty List: Holiday Tax Scams to Look Out ForTax Tips The IRS says scammers are on the prowl for your financial information. Know the signs so you don't fall victim.
-
Retirement Abroad? Three Countries Without Inheritance TaxRetirement Taxes These 2025 top-retiree-friendly countries have an added benefit: potential tax savings for you and your heirs.
-
Five Tax-Savvy Ways To Donate This Holiday SeasonCharitable Donations Food pantries, toy drives, and animal sanctuaries are popular ways to support others year-round.
-
Tax Pros: Is Someone Fraudulently Filing Returns With Your PTIN?Tax Filing An unmonitored preparer tax identification number (PTIN) can lead to serious issues.
-
Can Tariffs Make Childcare More Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable
