HDHPs May Pay for COVID-19 Testing and Treatment

The IRS has issued Notice 2020-15 permitting High Deductible Health Plans ("HDHPs") to cover testing and treatment for COVID-19, without affecting the status of a person as an "eligible individual" for tax exempt Health Saving Account ("HSA") contribution purposes.

In general, an individual is eligible to contribute (or have their employer contribute) to a HSA if they are:

  • covered by a HDHP;
  • not covered under another medical insurance plan, including a General Purpose Health Care FSA;
  • not enrolled in Medicare;
  • not receiving Social Security benefits; and
  • not claimed as a dependent on another person's tax return.

In most cases, a qualified HDHP may not pay benefits until its deductible has been satisfied. (In one exception to the general rule, expenses for "preventive care" may be paid before the deductible has been reached.)

However, the IRS now says that, "[P]art of the response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Due to the nature of this public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required...for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP."