High Deductible Health Plans and Expenses related to COVID-19

Many of the nation’s largest insurers have announced that they will be waiving the deductible or other cost-sharing for testing or other expenses related to the 2019 Novel Coronavirus (“COVID-19”).  Plan sponsors that offer coverage to employees through a high deductible health plan (“HDHP”) asked whether this waiver would affect the health plan’s status as a high deductible health plan and, relatedly, a participant’s ability to make pre-tax contributions to a health savings account.  Generally, an HDHP may not cover any expenses other than expenses for preventive care before the high deductible has been satisfied in order to qualify as an HDHP.

In a remarkably quick response, on March 11, 2020, the IRS announced in Notice 2020-15, that, until further guidance is issued, a health plan that otherwise satisfies the requirements to be an HDHP under the Internal Revenue Code will not fail to be an HDHP merely because the health plan provides medical care and services and items purchased related to testing for, and treatment of, COVID-19 prior to the satisfaction of the deductible.  As a result, plan participants in the HDHP will not fail to be eligible individuals merely because of the provision of benefits for testing and treatment of COVID-19, and may contribute to an HSA on a pre-tax basis.

The IRS further notes that vaccinations are considered to be preventive care under the HDHP rules and, therefore, if a vaccine is developed for COVID-19, a HDHP may reimburse the cost for the vaccination as a preventive care service before the deducible is satisfied.

About the Author:

Cynthia A. Moore is a Member in Dickinson Wright’s Troy office where she assists clients in all areas of employee benefits law. She can be reached at 248-433-7295 or cmoore@dickinsonwright.com and you can visit her bio here.