DC Tax Flash: IRS Proposes Rules on Deductibility of Payments for Medical Care Arrangements

Tax Alert
06.08.2020

The Internal Revenue Service (IRS) today issued proposed regulations on the tax treatment of amounts paid for certain medical care arrangements, including direct primary care arrangements, health care sharing ministries, and government-sponsored health care programs. The move was prompted by the president's Executive Order 13877 issued last June directing the Treasury Department to take action.

The rules propose that "expenditures for direct primary care arrangements and health care sharing ministry memberships are amounts paid for medical care as defined in section 213(d), and that amounts paid for those arrangements may be deductible medical expenses under section 213(a)," the IRS explains. The rulemaking also clarifies that "amounts paid for certain arrangements and programs, such as health maintenance organizations (HMO) and certain government-sponsored health care programs, are amounts paid for medical insurance under section 213(d)(1)(D)."

The IRS notes that the rules do not affect the tax treatment of any medical care arrangements that currently qualify as medical care under section 213(d).

The 26-page text of the proposed regulations is posted here.

An IRS press release is posted here.


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