The Internal Revenue Service ("IRS") released Notice 2020-15 today, Wednesday March 11, 2020, providing that high-deductible health plans (“HDHPs”) may cover costs associated with testing and treatment for COVID-19 without violating the HDHP-qualification rules under Section 223(c)(2)(A) of the Internal Revenue Code. Generally, participants enrolled in HDHPs coupled with a Health Savings Account (“HSA”) are required to pay all medical costs until reaching the plan’s minimum deductible. If a plan covers medical costs prior to meeting the deductible, the plan participant loses the ability to contribute to an HSA. Today’s guidance creates an exception under which an employee may continue to contribute to an HSA even if the plan covers the costs associated with testing or treatment for
COVID-19 prior to the employee’s satisfaction of the HDHP’s minimum deductible.
The IRS has issued previous guidance creating an exception to the HSA/HDHP rules for preventive health services, which include vaccines and screenings for certain specified conditions including HIV, certain cancers, and certain mental health disorders. Plans are able to cover these preventive services before the deductible is met. Nevertheless, employers have been concerned about covering COVID-19 testing or treatment without explicit IRS guidance stating that COVID-19 screenings and treatment services fall into the preventive services exception. In response to these concerns, considering “the nature of the public health emergency, and to avoid administrative delays or financial disincentives that
might otherwise impede testing for and treatment of COVID-19,” the IRS released today’s guidance specifically permitting plans to cover COVID-19 testing and treatment services without jeopardizing HDHP status.
Calfee encourages employers to consider covering COVID-19 testing and treatment under their HDHP and non-HDHP plans to help with its treatment and control of its spread.