HDHPs May Pay for COVID-19 Testing and Treatment Without Regard to Deductibles
High deductible health plans (HDHPs) will be allowed to pay for COVID-19 related testing and treatment without regard to whether the insured has met their deductible under relief announced by the IRS in Notice 2020-15.[1] Such payments will not impact the plan’s qualification as HDHPs, nor the ability of taxpayers covered by such plans to make contributions to health savings accounts (HSAs).
The IRS explains the justification for providing for this relief as follows:
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 otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.[2]
Specifically, the notice’s relief section provides for the following:
Due to the unprecedented public health emergency posed by COVID-19, and the need to eliminate potential administrative and financial barriers to testing for and treatment of COVID-19, a health plan that otherwise satisfies the requirements to be an HDHP under section 223(c)(2)(A) will not fail to be an HDHP merely because the health plan provides medical care services and items purchased related to testing for and treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible. As a result, the individuals covered by such a plan will not fail to be eligible individuals under section 223(c)(1) merely because of the provision of those health benefits for testing and treatment of COVID-19.[3]
Note that the notice does not serve to require HDHPs to provide this benefit, but merely enables them to provide it without ceasing to qualify as HDHPs. As the Notice indicates:
This notice provides flexibility to HDHPs to provide health benefits for testing and treatment of COVID-19 without application of a deductible or cost sharing. Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing.[4]
As well, the IRS points out this relief is limited to COVID-19 related testing and treatment, with all other rules remaining unchanged:
This guidance does not modify previous guidance with respect to the requirements to be an HDHP in any manner other than with respect to the relief for testing for and treatment of COVID-19. Vaccinations continue to be considered preventive care under section 223(c)(2)(C) for purposes of determining whether a health plan is an HDHP.[5]