IRS Outlines Changes to Health Care; New Rules for Health Care Spending Under CARES Act; The Internal Revenue Service (IRS) has advised that new rules should provide flexibility for health care spending under the CARES Act for COVID-19. As per the details, IRS Outlines Changes to Health Care spending under CARES Act will be helpful for the individuals who may require home services due to measures to fight the coronavirus. These changes in CARES Act have been made to provide more flexibility in the current environment of COVID-19 for health care spending.
IRS Outlines Changes to Health Care
The details of new rules for health care spending under CARES Act, specifically for Telehealth and High Deductible Health Plans (HDHPs) are listed below:
- Under the CARES Act, a high deductible health plan (HDHP) provisionally can cover telehealth and supplementary remote care services without a deductible. Furthermore, HDHP temporarily can cover these services with a deductible lower than the least annual deductible otherwise required by law.
- Telehealth and other remote care services also are temporarily included as categories of coverage that are overlooked for the intention to determine whether an individual who has extra health plan coverage in addition to an HDHP is a qualified individual who may make tax-favored contributions to his/her HSA.
- consequently, an otherwise qualified individual with coverage under an HDHP may still contribute to an HSA regardless of receiving coverage for telehealth and other remote care services earlier than satisfying the HDHP deductible, or even with receiving coverage for these services outside the HDHP.
- You can go through the IRS Notice 2020-29(PDF) to see the temporary rules under the CARES Act. These rules apply to the services provided on or after January 1, 2020, with regard to plan years beginning on or before December 31, 2021.
Expansion of Qualified Medical Expenses
The details of new rules for health care spending under CARES Act, specifically for the expansion of qualified medical expenses are listed below:
- The rules that apply to various tax-advantaged accounts (HSAs, Archer MSAs, Health FSAs, and HRAs) are also modified by the CARES Act.
- The modification is made so that additional items are “qualified medical expenses” that may be reimbursed from those accounts.
- In particular, the cost of menstrual care products is now reimbursable by the individuals under new rules of CARES Act. The products in this range cover tampons, pads, liners, cups, sponges or other related products.
- Not only this, over-the-counter (OTC) products and medications are now reimbursable without a prescription.
- Above stated new rules for expansion of qualified medical expenses are applicable to the amounts paid after December 31, 2019.
- Taxpayers are advised to save the receipts of their purchases for their records in order to submit claims for the reimbursement of these products.
Previously, the IRS allowed high-deductible health plans (HDHPs) to pay for the costs of COVID-19 treatment and testing. Apart from it, the IRS also provided tax relief through increased flexibility for taxpayers in Section 125 cafeteria plans. If you need any further details regarding how to get tax relief during coronavirus or new rules for health care spending under CARES Act, you may call our representative for best assistance