More Plan Types Eligible for Medical Expense Deductions

Proposed regulations address direct primary care arrangements and health care sharing ministry memberships

June 8, 2020

WASHINGTON — The Internal Revenue Service today released proposed regulations addressing the treatment of certain medical care arrangements under section 213 of the Internal Revenue Code.

Section 213 of the Code allows individuals to take an itemized deduction for expenses for medical care, including insurance for medical care, to the extent the expenses exceed 7.5% of adjusted gross income.

The proposed regulations address direct primary care (DPC) arrangements and health care sharing ministry (HCSM) memberships, and provide the following guidance:

• Payments for DPC arrangements are expenses for medical care under section 213 of the Code. Because these payments are for medical care, a health reimbursement arrangement (HRA) provided by an employer generally may reimburse an employee for DPC arrangement payments.

• Payments for membership in a HCSM are expenses for medical care under section 213 of the Code. Because these payments are for medical care, an HRA provided by an employer generally may reimburse an employee for HCSM membership payments.

The proposed regulations respond to Executive Order 13877, which directs the Secretary of the Treasury, to the extent consistent with law, to “propose regulations to treat expenses related to certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses under Section 213(d)” of the Code.