IRS Guidance for COVID-19 Testing and High Deductible Health Plans
On March 11, 2020, the IRS released Notice 2020-15, which addresses testing and treatment of the 2019 Novel Coronavirus (COVID-19) under a high deductible health plan (HDHP). Generally speaking, the IRS, until further notice, has removed any barriers to testing and treatment of COVID-19 under an HDHP, assuming the HDHP is otherwise compliant.
Under normal circumstances, there are many rules surrounding how an HDHP charges its participants for medical care. Certain tests or treatments must first be paid 100% out of pocket by a plan participant before the HDHP will cover any costs. If an HDHP violates these rules, the plan participants can lose the tax benefits associated with having a health savings account linked to a valid HDHP, which in turn causes substantial payroll issues for the employer.
In Notice 2020-15, the IRS states that “until further guidance is issued, a health plan that otherwise satisfies the requirements to be an [HDHP] … will not fail to be an HDHP … merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible or cost sharing, or with a deductible below the minimum deductible (self only or family) for an HDHP.”
Therefore, when deciding how to plan for and respond to COVID-19, employers with an otherwise compliant HDHP are free to provide testing and/or treatment services to participants without any deductible or with a deductible below the minimum amount set in the tax code.
For questions contact N. Thomas Horton, H. Joseph Cohen or Steve R. Uhey.
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