If a taxpayer has a qualifying HDHP, he or she is eligible to contribute to a health savings account (HSA). If a high-deductible plan loses its status, the taxpayer could be penalized for participating in a plan that does not meet HSA requirements. Many taxpayers take advantage of contributing to an HSA to cover current health expenses or to defer for health expenses in retirement.
Generally, HDHPs are prohibited from covering expenses until the deductible is met. However, HDHPs can offer first-dollar coverage for certain preventative care and chronic illness care. An example might be first-dollar coverage for a mammogram.
COVID-19 testing and treatment is now included in the “first-dollar benefits”, and coverage will not affect high-deductible plan status. This means that a taxpayer’s ability to contribute to an HSA will not be affected if the plan offers first-dollar coverage for COVID-19 testing and treatment.
This information is important to both financial professionals and their clients. Clients can benefit from a quick update. This also might be a great time to help clients address other concerns, such as having a floor under their investment accounts.
If you have any questions regarding IRS Notice 2020-15, please contact the Retirement Strategies Group at (800) 722-2333, or email us at RSG@PacificLife.com.
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Unless otherwise noted, all aforementioned money managers, their distributors, and affiliates are unaffiliated with Pacific Life and Pacific Select Distributors, LLC.
Pacific Life refers to Pacific Life Insurance Company and its subsidiary Pacific Life & Annuity Company. Insurance products can be issued in all states, except New York, by Pacific Life Insurance Company and in all states by Pacific Life & Annuity Company. Product/material availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues.
Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company and an affiliate of Pacific Life & Annuity Company.
The home office for Pacific Life & Annuity Company is located in Phoenix, Arizona. The home office for Pacific Life Insurance Company is located in Omaha, Nebraska.
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