The Triple Tax Break You May Be Missing: A Health Savings Account

The federal government’s pandemic relief program expanded what H.S.A.s can pay for, including nonprescription medicine like pain relief and allergy pills, and menstrual products like tampons and pads. (The I.R.S. has a full list of eligible items.)

Some employers match contributions to H.S.A.s as they do retirement savings. But self-employed people and contractors can open them, too.

People often confuse H.S.A.s with other types of health accounts, such as flexible health spending accounts. But unlike F.S.A.s, health savings accounts are portable: If you change jobs or leave the work force, you keep the account. Contribution limits are higher for H.S.A.s, and there is no deadline to spend the cash. Unspent money can be invested for health needs in retirement.

A study published last summer in JAMA Network Open, a journal from the American Medical Association, found that many people with high-deductible insurance didn’t have a health savings account. And more than half who had one had not contributed to it in the previous year. People with health plans bought through a government exchange were more likely to not have an H.S.A., even though the average deductible in the federal marketplace is high enough.

How Has the Pandemic Changed Your Taxes?

Nope. The so-called economic impact payments are not treated as income. In fact, they’re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more.

Mostly.  Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don’t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won’t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you’ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren’t automatically withheld. Recipients must opt in — and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more.

Probably not, unless you’re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. “Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,” the I.R.S. said. Read more.

Self-employed people can take paid caregiving leave if their child’s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit — 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more.

Yes. This year, you can deduct up to $300 for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can’t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more.

The findings suggest that health plans, employers and financial advisers could do more to explain how H.S.A.s work, simplify their use and encourage contributions, said an author of the study, Dr. Jeffrey T. Kullgren, associate professor of internal medicine and health management and policy at the University of Michigan.

“Anything that makes it easier would be a good thing,” he said.

H.S.A. providers increasingly are cutting fees and using technology to encourage use. Fidelity Investments this month will test an app that will allow clients with employer H.S.A.s to track account balances, contributions and spending. The app will also let users scan products to check if they are H.S.A.-eligible.

Others are focusing on workers in the gig economy. Starship, a start-up, promotes its accounts through affiliations with ride-hailing and delivery companies. Its app allows workers to automatically invest contributions in low-cost index funds and exchange-traded funds. Because there is no required minimum balance, users are able to invest all of their contributions. But that would also leave no cash available to cover medical costs, unless the investments are sold. Starship sets the default minimum threshold before investing at $2,000, but users can lower it to zero, said Sean Engelking, the company’s chief executive.

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A $22,368 Bill That Dodged and Weaved to Find a Gap in America’s Health System

John Druschitz spent five days in a Texas hospital last April with fever and shortness of breath. It was still the early days of the pandemic, and doctors puzzled over a diagnosis.

They initially suspected coronavirus and hung signs outside his door warning those entering to wear protective equipment. Mr. Druschitz had already spent two weeks at home with worsening symptoms. He recalls one doctor telling him, “This is what it does to a person.”

Ensuing lab work, however, was ambiguous: Multiple molecular tests for coronavirus came back negative, but an antibody test was positive.

Doctors found that Mr. Druschitz had an irregular heartbeat and blood clots in both his lungs. They sent him home on oxygen, and ultimately did not give a coronavirus diagnosis because of the negative tests. He didn’t think much about the decision until this fall, when he received a $22,367.81 bill that the hospital has since threatened to send to collections.

too narrow, and for covering bills only where coronavirus is the primary diagnosis. A patient with a primary diagnosis of respiratory failure and a secondary diagnosis of coronavirus would not qualify, for example.

The Health Resources and Services Administration, which runs the federal fund, does not have plans to change that policy. So far, it has spent $2 billion to reimburse health care providers for the bills of uninsured coronavirus patients.

“The H.R.S.A. uninsured program is a voluntary claims program, not an insurance program,” said Martin Kramer, an agency spokesman. “The scope is narrow, and its primary function is to help combat Covid-19 by removing financial barriers.”

The hospital that treated Mr. Druschitz — the Baylor, Scott and White Medical Center in Austin, Texas — did not submit his charges for reimbursement because of the negative coronavirus tests, said Julie Smith, a spokeswoman.

“The nucleic amplification Covid-19 test is the standard to diagnose or rule out Covid-19,” she said in an email. “Because the diagnosis for this admission was not Covid-19, his hospital stay is not eligible.”

The positive antibody test, she said, “may indicate a previous infection.”

The hospital has submitted other claims to the uninsured fund, and has so far received a quarter-million dollars in reimbursement. It has applied a 40 percent uninsured discount to Mr. Druschitz’s $34,058 charge. It’s not clear from his billing codes whether the hospital is pursuing him for a larger amount than what the federal fund for uninsured people would have paid.

Multiple clinicians with expertise in Covid-19 reviewed Mr. Druschitz’s medical records for The New York Times. They said that his case was ambiguous: It wasn’t completely clear whether coronavirus had caused his symptoms.

“There is a good chance that he did have Covid-19, and I base that on the fact that his symptoms are consistent with that diagnosis,” said Dr. Alexander McAdam, an associate professor of pathology at Harvard. “The lab data, however, don’t definitively demonstrate that.”

Dr. McAdam was not surprised that a Covid test at the hospital could come back negative even when Mr. Druschitz was very ill.

“People can have persistent symptoms even after the virus is no longer detectable,” he said. “It could be the virus is now in the lower respiratory tract but not the upper,” meaning it might not show up on a test.

But he and Dr. Jha, who also reviewed the records, said they would have expected an earlier test, conducted 10 days before his hospital stay, to be positive. It would be unusual for a test to be negative at that point, as Mr. Druschitz’s was, when he was already symptomatic.

“It’s more likely than not that he did not have Covid, but it’s certainly not a zero chance,” Dr. Jha said. “The fact that it will end up making a big difference in the bill is really problematic.”

Mr. Druschitz’s primary care provider, Dr. Craig Kopecky, who saw him shortly before and after the hospital visit, says that the diagnosis is wrong and that his patient did have coronavirus.

Dr. Kopecky initially suspected bronchitis when Mr. Druschitz came to his office in mid-April with a cough and some shortness of breath. He began to suspect Covid in a follow-up telemedicine visit 10 days later.

“At that point he’d started to lose some of his sense of taste,” he said. “I couldn’t examine him because it was telemedicine, but I could clearly hear him struggling to breathe.”

Dr. Kopecky submitted his bills for Mr. Druschitz’s treatment to the federal fund for uninsured patients, and said he received reimbursement.

The patient advocate that Mr. Druschitz retained, Jan Stone of StoneWorks Healthcare Advocates, has asked the hospital to re-evaluate the diagnosis. She’s now running up against a deadline: Hospitals have one year to submit claims to the uninsured fund. This means the hospital would need to file for reimbursement within the next six weeks.

“The clock is definitely ticking,” she said.

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China subjects some travelers to anal swabs, angering foreign governments.

China is requiring some travelers arriving from overseas to receive an invasive anal swab test as part of its coronavirus containment measures, a move that has outraged and shocked several foreign governments.

Japanese officials said on Monday that they had formally asked China to exempt Japanese citizens from the test, adding that some who had received it complained of “psychological distress.” And the United States State Department last month said it had registered a protest with the Chinese government after some of its diplomats were forced to undergo anal swabs, though Chinese officials denied that.

It is not clear how many such swabs have been administered or who is subject to them. Chinese state media has acknowledged that some arrivals to cities including Beijing and Shanghai are required to take the tests, though the reports said the requirements might vary depending on whether the travelers were deemed to be high-risk.

Chinese experts have suggested that traces of the virus may survive longer in the anus than in the respiratory tract and that samples of the former may prevent false negatives. China has imposed some of the strictest containment measures in the world, including barring most foreign arrivals, and has largely suppressed the epidemic.

Global Times tabloid that nasal or throat swabs could cause “uncomfortable reactions,” leading to subpar samples. He acknowledged that fecal samples could replace anal swabs, to prevent similar discomfort.

But other experts — including in China — have questioned the need for anal samples. The Global Times quoted another expert, Yang Zhanqiu, as saying that nasal and throat swabs are still the most effective because the virus is contracted through the respiratory tract.

Benjamin Cowling, a public health professor at the University of Hong Kong, said in an interview that even if someone did test positive on an anal swab but not a respiratory one, he or she would likely not be very contagious.

“The value of detecting people with the virus is to stop transmission,” Professor Cowling said. “If someone has got an infection but they’re not contagious to anyone else, we didn’t need to detect that person.”

A spokesman for the Chinese Foreign Ministry said this week that the government would make “science-based adjustments” to its containment policies.

Professor Cowling said he did not know what the scientific rationale was behind the existing policies. “I presume there’s some evidence leading to this decision, but I haven’t seen that evidence,” he said.

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