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HDHPs May Cover COVID-19 Tests and Treatment Costs Without Jeopardizing HSA Status

Mar 11, 2020 blog featured image

Today the IRS released Notice 2020-15 stating that high-deductible health plans (HDHPs) can pay for 2019 novel coronavirus (COVID-19) testing and treatment without compromising an individual’s ability to contribute to a health savings account (HSA).

Individuals covered by an HDHP generally may establish and make contributions to an HSA. To qualify as an HDHP, the plan cannot provide benefits for any year until a minimum deductible is satisfied, except for preventive care. Preventive care includes services like routine physical exams, well-child visits, immunizations and cancer screenings. Preventive care generally does not include any service or benefit intended to treat an existing illness, injury or condition.

However, IRS Notice 2020-15 states that “part of the response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Due to the nature of this public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible” will be disregarded for purposes of determining the status of the plan as an HDHP.

This does not require any plan to cover the COVID-19 testing and/or treatment. Rather, it allows the plan to do so without compromising its HSA compatibility status.

Notably, some states have directed carriers in their state to cover COVID-19 testing at 100% with no member cost share. Some carriers have indicated they will cover COVID-19 testing at 100% (even if the state doesn’t require it). Neither of these measures require self-funded plans to follow suit.

Employers should consult with their benefit advisors to determine how their plans will cover COVID-19 testing and treatment, and whether any changes should be made.

Reach out to your Hylant representative or visit the Hylant Coronavirus Resource Center at www.hylantcoronavirusinfo.com to access a wide variety of materials designed to help you navigate these unprecedented times.

The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.

Author Holly Wahl, Hylant Vice President, Employee Benefits Compliance Leader