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).