Par. 2. Section 1.213-1 is amended by: 1. Redesignating paragraphs (e)(1)(v) and (vi) as (e)(1)(vi) and (vii) respectively. 2. Adding a new paragraph (e)(1)(v). 3. Redesingnating newly redesignated paragraphs (e)(1)(vi)( a ) through ( c ) as (e)(1)(vi)(A) through (C). 4. Redesignating paragraphs (e)(4)(i)( a ) and ( b ) as (e)(4)(i)(B) and (C) respectively. 5. Adding a new paragraph (e)(4)(i)(A). 6. Revising newly redesignated paragraph (e)(4)(i)(B). 7. In newly redesignated paragraph (e)(4)(i)(C): i. Adding a subject heading; ii. Redsignating the introductory text as paragraph (e)(4)(i)(C)( 1 ) introductory text and paragraphs (e)(4)(i)(C)( 1 ) and ( 2 ) as paragraphs (e)(4)(i)(C)( 1 )( i ) and ( ii ); iii. Removing the words “(a) of this subdivision” and add in their place the words “paragraphs (e)(4)(i)(A) and (B) of this section” in newly redesignated paragraph (e)(4)(i)(C)( 1 ) introductory text; iv. Designating the undesignated paragraph following newly redsignated paragraph (e)(4)(i)(C)( 1 )( ii ) as paragraph (e)(4)(i)(C)( 2 ); and v. Removing “subdivision ( b )” and adding in its place “paragraph (e)(4)(i)(C)” in newly designated paragraph (e)(4)(i)(C)( 2 ) The additions and revision read as follows:
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(e) * * *
(1) * * *
(v)(A) Direct primary care arrangements. Expenses paid for medical care under section 213(d) include amounts paid for a direct primary care arrangement. A “direct primary care arrangement” is a contract between an individual and one or more primary care physicians under which the physician or physicians agree to provide medical care (as defined in section 213(d)(1)(A)) for a fixed annual or periodic fee without billing a third party. A “primary care physician” is an individual who is a physician (as described in section 1861(r)(1) of the Social Security Act) who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine.
(B) Applicability date. The rules of this paragraph (e)(1)(v) apply to taxable years ending on or after [the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register ].
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(4)(i)(A) Medical insurance contracts and programs —( 1 ) In general. In determining whether a contract constitutes an “insurance” contract under section 213(d)(1)(D), it is irrelevant whether the benefits are payable in cash or in services. For example, amounts paid for hospitalization insurance, for membership in an association furnishing cooperative or so-called free-choice medical service, for group hospitalization and clinical care, or for membership in a health maintenance organization (HMO) are payments for medical insurance under section 213(d)(1)(D).
( 2 ) Health care sharing ministries. —Amounts paid for membership in a health care sharing ministry that shares expenses for medical care, as defined in section 213(d)(1)(A), are payments for medical insurance under section 213(d)(1)(D). A health care sharing ministry is an organization:
( i ) Which is described in section 501(c)(3) and is exempt from taxation under section 501(a);
( ii ) Members of which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the State in which a member resides or is employed;
( iii ) Members of which retain membership even after they develop a medical condition;
( iv ) Which (or a predecessor of which) has been in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999; and
( v ) Which conducts an annual audit which is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and which is made available to the public upon request.
( 3 ) Government-sponsored health care programs. Amounts paid for coverage under government-sponsored health care programs may be amounts paid for medical insurance under section 213(d)(1)(D). Taxes imposed by any governmental unit that fund such a program, however, do not constitute amounts paid for medical insurance. The following government-sponsored health care programs are medical insurance under section 213(d)(1)(D):
( i ) The Medicare program under Title XVIII of the Social Security Act (42 U.S.C. 1395c and following sections), including Parts A, B, C, and D;
( ii ) Medicaid programs under title XIX of the Social Security Act (42 U.S.C. 1396 and following sections);
( iii ) The Children's Health Insurance Program (CHIP) under title XXI of the Social Security Act (42 U.S.C. 1397aa and following sections);
( iv ) Medical coverage under chapter 55 of title 10, U.S.C., including coverage under the TRICARE program; and
( v ) Veterans' health care programs under chapter 17 or 18 of Title 38 U.S.C.
( 4 ) Applicability date. The rules of this paragraph (e)(4)(i)( a ) apply to taxable years ending on or after [the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register ].
(B) Insurance contract covering more than medical care. Amounts are paid for medical insurance under section 213(d)(1)(D) only to the extent that such amounts are paid for insurance covering expenses of medical care referred to in paragraph (e)(1) of this section or for any qualified long-term care insurance contract as defined in section 7702B(b). Amounts will be considered payable for other than medical insurance under a contract if the contract provides for the waiver of premiums upon the occurrence of an event. In the case of an insurance contract under which amounts are payable for other than medical insurance (as, for example, a policy providing an indemnity for loss of income or for loss of life, limb, or sight)—
( 1 ) No amount shall be treated as paid for medical insurance under section 213(d)(1)(D) unless the charge for such insurance is either separately stated in the contract or furnished to the policyholder by the insurer in a separate statement,
( 2 ) The amount taken into account as the amount paid for such medical insurance shall not exceed such charge, and
( 3 ) No amount shall be treated as paid for such medical insurance if the amount specified in the contract (or furnished to the policyholder by the insurer in a separate statement) as the charge for such insurance is unreasonably large in relation to the total charges under the contract. In determining whether a separately stated charge for insurance covering expenses of medical care is unreasonably large in relation to the total premium, the relationship of the coverage under the contract together with all of the facts and circumstances shall be considered.
(C) Premiums paid after taxpayer attains the age of 65. * * *
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