A high deductible health plan (HDHP) eligible to be coupled with a health savings account (HSA) requires meeting a federal minimum deductible on all care before the plan can begin to pay benefits. The only exception is for preventive care (defined in IRS Notice 2004-23, IRS Notice 2019-45, and the Affordable Care Act (PHSA §2713) preventive care mandates), which may be covered with low or no cost sharing before the federal deductible has been met.
However, at the start of the COVID-19 pandemic, IRS Notice 2020-15 announced in the interest of public health that HDHP participants could obtain COVID-19 testing and treatment at low or no cost before the federal deductible has been met without compromising eligibility to contribute to an HSA until further guidance is issued.
That further guidance was released via IRS Notice 2023-37 which clarifies that, with the end of the COVID-19 public health emergency behind us, HSA relief for COVID-19 testing and treatment before the deductible will no longer be available for plan years ending after December 31, 2024.
- For calendar year plans, this means calendar year 2024 is the final year HDHPs can cover COVID-19 tests and treatment at low or no cost before the federal deductible has been met.
- For non-calendar year plans, the 2023 plan year ending in 2024 is the final year HDHPs can provide such coverage.
A large number of plans have already shifted to impose cost sharing on COVID-19 testing and treatment, so it’s likely qualified HDHPs already have or soon will require the deductible to be met for these expenses well before the relief expires in 2024.
IMA Note: As a reminder, HSA relief for telemedicine was also extended by Congress. That relief is available for plan years beginning before January 1, 2025.
Other Guidance Included in IRS Notice 2023-37
In addition to announcing the 2024 expiration of HSA relief for COVID-19 testing and treatment, the IRS also clarified two other points:
- While the Braidwood lawsuit continues to be evaluated, the IRS considers all USPSTF preventive care with an “A” or “B” rating to be allowable before the deductible without compromising HSA eligibility.
- Despite Congress and the President declaring the COVID-19 national emergency ended April 10, 2023, “the Federal Emergency Management Agency (FEMA) gave notice in the Federal Register that the national emergency under the Stafford Act would end on May 11, 2023.” Therefore, the appropriate end date of Outbreak Period relief is July 10, 2023 as indicated in FAQs Part 58 and discussed by us here.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.