High-deductible health plans can cover coronavirus testing, treatment

To respond to the public health emergency posed by COVID-19, the IRS announced that a high-deductible health plan (HDHP) will still qualify as an HDHP even if it provides payment for medical care services and items purchased related to testing for and treatment of COVID-19 before satisfying the applicable minimum deductible that normally applies to an HDHP. As a result, individuals covered by an HDHP will not fail to be eligible individuals under Sec. 223(c)(1) (who may make tax-favored contributions to a health savings account) merely because of the provision of those health benefits for testing and treatment of COVID-19.

An HDHP is a health plan that satisfies certain requirements for minimum deductibles and maximum out-of-pocket expenses. Generally, under Sec. 223(c)(2)(A), an HDHP may not provide benefits for any year until the minimum deductible for that year is satisfied.

Part of the government’s response to COVID-19 involves removing barriers to testing for and treating the virus. Because of the nature of the public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treating COVID-19 for HDHP participants, Notice 2020-15 provides that all medical care services received and items purchased associated with testing for and treating COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under Sec. 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.

The notice does not otherwise modify the requirements to be an HDHP in any other manner. The IRS noted specifically that vaccinations continue to be considered preventive care under Sec. 223(c)(2)(C) in determining whether a health plan is an HDHP.

— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page.