The IRS issued guidance on March 11 that clears the way for employers to offer employees covered by a high-deductible health plan (HDHP) testing and treatment for the 2019 Novel Coronavirus (COVID-19) with no deductible or at a lower deductible.
Under current law, a plan cannot be an HDHP unless it has a minimum deductible of $1,400 for self-only coverage and $2,800 for family coverage (in 2020). Employees must satisfy the applicable deductible before the plan pays any benefits.
Under IRS Notice 2020-15, a plan that otherwise meets the requirements of an HDHP and that offers coverage of medical services and supplies for the testing and treatment of COVID-19 with no deductible, or at a lower deductible, will still be considered an HDHP. Employees who are covered by such a plan will remain eligible to make tax-favored contributions to a health savings account (HSA).
According to the guidance, this relief is being extended “[d]ue to the unprecedented public health emergency posed by COVID-19, and the need to eliminate potential administrative and financial barriers” to testing and treatment. A vaccination, should one become available, will be considered preventive care, which can be offered under an HDHP without a deductible under existing law.
Employers should consult with their third-party administrators and insurers about the availability and implementation of special processing for COVID-19 benefits.