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Health Plans

High Deductible Health Plans Can Offer COVID-19 Coverage Without Cost Sharing

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

In a Notice and accompanying News Release, the IRS has provided that a high deductible health plan (HDHP) will not fail to be an HDHP merely because the plan provides medical care services and items purchased related to testing for and treatment of COVID-19 (coronavirus) prior to the satisfaction of the applicable minimum deductible. (Notice 2020-15, 2020-14 IRB; IR 2020-54, 3/11/2020.)

Background. Code Sec. 223(a) permits eligible individuals to deduct contributions to Health Savings Accounts (HSAs). Among other requirements, to qualify as an “eligible individual,” an individual must be covered under an HDHP and not have any disqualifying health coverage. (Code Sec. 223(c)(1)) Generally, an HDHP is a health plan that satisfies certain requirements, including requirements with respect to minimum deductibles and maximum out-of-pocket expenses (cost sharing). (Code Sec. 223(c)(2)(A))

HDHP may pay for COVID-19 testing, treatment, before deductible, cost sharing. According to the Notice, an HDHP will not lose its HDHP status if it pays, without applying the minimum deductible or any cost sharing, for a plan participant’s testing for and treatment of COVID-19. Also, the plan’s participants will not fail to be “eligible individuals” merely because the HDHP makes such payments and can continue to contribute to their HSAs.

The Notice recommends that HDHP plan participants consult their own health plan to determine any health benefits for testing for and treatment of COVID-19 provided by their plan, including the potential application of any deductible or cost-sharing.

Observation. The Notice does not require HDHPs to provide testing and treatment services without a deductible or cost sharing. It provides only that an HDHP may provide such benefits without losing its HDHP status.

The Notice does not modify previous guidance regarding the requirements to be an HDHP other than with respect to testing for and treatment of COVID-19.

This article originally appeared in the March 12, 2020 edition of Federal Tax Update, available on Checkpoint.

 

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