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.
Pacific Life, its distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product 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 (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company. Variable and fixed annuity products are available through licensed third parties.
No bank guarantee • Not a deposit • Not FDIC/NCUA insured • May lose value • Not insured by any federal government agency
For financial professional use only. Not for use with the public.