IRS: High-Deductible Health Plans Can Cover COVID-19 Screening
The IRS has published guidance permitting High Deductible Health Plans (“HDHPs”) to cover the costs of screening for the COVID-19 virus.
The welcome news was published in IRS Notice 2020-15 (“Notice”) and is important for the growing number of employers who have HDHPs and want employees and their families to have access to this important screening. In the Notice, the IRS indicated that the unprecedented public health emergency dictated guidance to “eliminate potential administrative and financial barriers” to screening for COVID-19, which the World Health Organization has declared a global pandemic.
Why was the Notice needed?
HDHPs are employer-provided health plans that require the participant to pay a deductible of at least $1,400 (or a deductible of at least $2,800 for family coverage) before the plan provides coverage, unless an exception (such as preventative care) applies. If an HDHP provides coverage before the required minimum deductible is met, the participant cannot contribute to a Health Savings Account (“HSA”). HSAs are a tax-favored way for individuals to save and pay for certain health expenses.
Before the Notice was issued, it was unclear if screening for COVID-19 would fall under the preventative care exception. This is because historically preventative care primarily covered vaccines, physicals and only certain screenings that could result in preventing illness in the future. Many took the position that anything that can help stop the spread of the virus should be treated as preventative. However, without guidance from the IRS, there could be little certainty and the risk of losing the tax savings some rely on to afford health care was concerning.
What does the Notice cover?
The Notice provides clear authority permitting HDHPs to cover screening for COVID-19. Also included in the Notice is authority to cover either all associated costs or only a portion of those costs. It is important to note that the Notice permits this screening to be covered, but does not require that it be covered. Accordingly, a high deductible health plan sponsor or administrator must decide if this screening will be covered and if so, in what amount. The Notice also indicates that it only permits this particular type of screening to be preventative care and the HDHP must otherwise be in compliance with the Tax Code requirements.
Where can I receive more information?
For more information about this guidance and other questions relating to your health plans or how to address your COVID-19 concerns for your employees and business, contact us using the information below.
For more information about COVID-19, you can go to:
- https://www.cdc.gov/coronavirus/2019-ncov/index.html (United States Center For Disease Control “CDC”),
- https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen (World Health Organization “WHO”), or
- https://hub.jhu.edu/novel-coronavirus-information/ (Johns Hopkins).