The IRS has issued Notices due to the unprecedented public health emergency posed by COVID-19, and the need to eliminate potential administrative and financial barriers affecting many Americans.
IRS Notice 2020-15
HDHPs and HSAs
In Notice 2020-15, the IRS indicates that health plans that are High Deductible Health Plans (“HDHPs” ) will not lose that status just because they cover the cost of testing and/or treatment of COVID-19 before plan deductibles have been met. The Notice also clarifies that an individual covered by an HDHP will not be disqualified from being an eligible individual under a Health Saving Account (“HSA") and may continue to make HSA contributions. In addition, the diagnosis and treatment of COVID-19 and any future vaccination costs qualify as essential health benefits under the ACA (“Affordable Care Act”). This means such expenses will count as preventive care and can be paid for by an HDHP. Note that this Notice applies only to HSA-eligible HDHPs.
IRS Notice 2020-18
The recently issued IRS Notice 2020-18 reiterates and supersedes Notice 2020-17. The Notice provides tax relief and postpones the due date for filing Federal income tax returns and making payments. As a result, any taxpayer whose original due date for filing Federal income tax returns and making tax payments was April 15, 2020, has had their deadline extended to July 15, 2020. During this time period, the calculation of any interest, penalty, etc. is also postponed.
This delay also impacts retirement plans:
- Retirement plan participants that made excess contributions to their employer’s retirement plan in 2019 must still take those excess monies out of the plan by April 15. This due date was not extended by the Notice.
- Retirement plan participants that owe the 10% tax penalty due to taking an early distribution from their employer’s plan in 2019 now have until July 15 to report and pay the penalty.
- Employers that sponsor qualified retirement plans now have until July 15 to make tax-deductible contributions to the plan, as the grace period to make contributions is now extended.
- 2019 IRA contributions may be made until July 15.
Because the due date for filing Federal income tax returns is now July 15, 2020, Affected Taxpayers may make contributions to their 2019 HSA (or Archer MSA for 2019) at any time up to July 15, 2020.
Nyhart will continue to monitor the situation as it relates to retirement and health and welfare plans and will publish updates when necessary. Our systems will be updated for the new 2019 HSA contribution deadlines. If you have any questions, please contact your Nyhart consultant for more information.