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.
-
Stock Market Today: Dow Slides 697 Points on Super-Hot Jobs DataWhen the December nonfarm payrolls report hit the tape, there was no question which way stocks would go at Friday's opening bell.
-
Essential Tech Tools for Managing Your Home and Finances While TravelingStay secure and stress-free on the go with the best tech tools for managing your home, bills and security from anywhere.
-
IRS Free File Is Now Open for 2025: Are Your Taxes Eligible?Tax Filing Official tax season doesn't begin until late January, but taxpayers can start filing free online returns now.
-
California Fires: How to Recover Tax Records and Other Important DocumentsDisaster Recovery Having your tax records and other vital documents is important for claiming casualty loss deductions that can help with recovery.
-
Child and Dependent Care Credit: How Much Is It?CDCTC The non-refundable tax break can help working families afford quality care for their child or qualifying dependent.
-
Maryland Property Tax Assessment: What It Means for YouState Tax Amid a growing deficit, Maryland property values are rising. Here’s more of what to know.
-
Gov. Hochul Wants to Triple the New York Child Tax CreditState Tax Millions of New York families could get a larger state child tax credit check over the next two years under a new proposal.
-
U.S. Consumers May Feel Pinch From Panama Canal Tariff HikeTax Policy The Panama Canal tariffs on crossing ships will add to looming price hikes for U.S. consumers as Trump threatens to take control of the historic waterway.
-
The American Opportunity Tax Credit (AOTC): How Much Is It Worth?Tax Credits This tax break can help you offset $2,500 in qualifying expenses tied to your higher education. Here's what you need to know.
-
Does Your State Have a Child and Dependent Care Tax Credit?
Child and Dependent Care Tax Credit Over two dozen states, plus the District of Columbia offer tax credits or deductions for working families.
