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IRS Allows HDHP to Cover Coronavirus Testing with Little or No Deductible


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, 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.

A few things to keep in mind about this guidance:

  • The IRS has not set an expiration date for this relief; it remains in effect until further guidance is issued.

  • As noted above, it does not require HDHPs to provide first-dollar coverage for COVID-19 testing or treatment, it merely permits them to do so without compromising a plan’s HDHP status. Employers could choose, for example, to waive deductibles for COVID-19 testing but not for treatment.

  • Any waiver or application of reduced deductibles or other cost-sharing (e.g., copayments or coinsurance) requirements for COVID-19 testing and treatment may necessitate an amendment to a health plan’s document and/or summary plan description.

  • It appears to apply to both self-insured and fully insured plans.

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