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COVID-19 Testing & Treatment and HDHPs

Posted on September 5th, 2023

Under guidance issued in 2020, qualified High Deductible Health Plans (HDHPs) have been permitted to cover COVID-19 testing and treatment prior to the deductible and without it impacting the eligibility for a person to make contributions to a Health Savings Account (HSA). The Internal Revenue Service (IRS) has recently indicated this temporary provision will be coming to an end.

In Notice 2023-37, the IRS has indicated that COVID-19 testing and treatment must be subject to the HDHP deductible in order to avoid any adverse effect on a person’s ability to make contributions to an HSA. In essence, COVID-19 testing and treatment will no longer qualify as a preventive care benefit that can be covered prior to the plan deductible.

The IRS is allowing for a transition period before the enforcement of this provision will apply. The change will apply for plan years ending on or before December 31, 2024 (otherwise stated, it will apply to plan years starting or renewing after January 1, 2024).

The Notice recognizes that the screenings and testing for some medical conditions are considered preventive care and can be covered prior to the HDHP deductible; however, the Notice indicates the screenings, testing, and treatment for “common and episodic illnesses,” such as the flu, and COVID-19, are treated differently. As such, they cannot be covered before the plan’s deductible without it impacting HSA eligibility.
Lastly, the Notice touches on preventive services that are recommended by the United States Preventive Services Task Force (USPSTF) that have an “A” or “B” rating. A lawsuit is challenging whether or not health insurance plans must cover these services at 100%. This Notice confirms that an HDHP can cover these services, with or without the services being subject to the plan deductible, and it will not jeopardize HSA eligibility.

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