IRS issues guidance on COVID-19 testing coverage

By Sally P. Schreiber, J.D.

In Notice 2020-66, the IRS said that Medicaid coverage of COVID-19 testing and diagnostics services would not be considered minimum essential coverage for purposes of the Sec. 36B premium tax credit. Normally, a taxpayer is allowed a premium tax credit only for months that are coverage months for individuals in the taxpayer’s family, as defined in Regs Sec. 1.36B-1(d).

Under Regs. Sec. 1.36B-3(c)(1)(ii), a coverage month for an individual includes only those months the individual is not eligible for minimum essential coverage, except coverage in the individual market. Minimum essential coverage is defined in Sec. 5000A(f) and generally includes coverage under government-sponsored programs, including Medicaid coverage. The IRS has determined that certain health care coverage providing limited benefits is not minimum essential coverage under a government-sponsored program. (Regs. Sec. 1.5000A-2(b)(2)).

According to the IRS, Medicaid coverage limited to COVID-19 testing and diagnostic services is not minimum essential coverage under a government-sponsored program. Therefore, if an individual is eligible for this coverage for one or more months, it does not prevent those months from qualifying as coverage months for purposes of determining eligibility for the Sec. 36B premium tax credit.

This guidance is effective in tax years beginning in or after 2020. If no proposed regulations or other guidance is released within 18 months after this notice is published in the Internal Revenue Bulletin, taxpayers may continue to rely on this interim guidance until further guidance is issued.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the JofA’s coronavirus resources page.

For tax-related resources, visit the AICPA’s COVID-19: Tax resources page.

Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.

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