IRS Notice 2023-37 (June 23, 2023)
In response to the end of the COVID-19 emergency, the IRS has issued a notice modifying its 2020 guidance regarding the COVID-19 testing and treatment benefits that can be provided by a high-deductible health plan (HDHP). Under the 2020 guidance, HDHPs can provide those benefits without a deductible or with a deductible below the applicable HDHP minimum deductible (self-only or family), thereby allowing individuals to receive coverage under HDHPs that provide such benefits on a no- or low-deductible basis without any adverse effect on HSA eligibility (see our article). Agency FAQs issued earlier this year indicated that the 2020 guidance would apply until further guidance was issued (see our article). This latest notice provides that, due to the end of the COVID-19 emergency, the relief described in the 2020 guidance is no longer needed and will apply only for plan years ending on or before December 31, 2024.
The notice also addresses the status of certain items and services as preventive care under the Code’s HSA eligibility rules. According to the notice, the preventive care safe harbor under those rules (see our article) does not include COVID-19 screening (i.e., testing), effective as of the notice’s publication date. The notice acknowledges that the preventive care safe harbor includes screening services for certain infectious diseases but also observes that screenings for “common and episodic illnesses, such as the flu” are not included and concludes that COVID-19 differs from the types of diseases on the list. The notice further provides that—consistent with recent agency FAQs regarding the impact of the trial court’s decision in the Braidwood case (see our article)—items and services recommended with an “A” or “B” rating by the United States Preventive Services Task Force (USPSTF) on or after March 23, 2010, are treated as preventive care under the HSA eligibility rules, whether or not they must be covered without cost sharing under the preventive services mandate. Thus, if the USPSTF were to recommend COVID-19 testing with an “A” or “B” rating, then that testing would be treated as preventive care under the HSA eligibility rules, regardless of whether coverage without cost-sharing is required under the preventive services mandate.
EBIA Comment: Employers, HSA account holders, and HDHP providers will appreciate having more than a year’s advance notice of the 2020 guidance’s expiration. And while the clarification that COVID-19 testing does not qualify as preventive care under the HSA rules is effective immediately, the notice effectively provides a transition period by allowing HDHPs to continue to provide benefits for COVID-19 testing on a no- or low-deductible basis for a limited time. For more information, see EBIA’s Consumer-Driven Health Care manual at Sections X.G (“Preventive Care”) and X.H (“COVID-19 Testing and Treatment”).
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