Covid-19 HIGH DEDUCTIBLE HEALTH PLANS AND EXPENSES
To facilitate the nation’s response to the 2019 Novel Coronavirus (COVID-19),
this notice provides that, until further guidance is issued, a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) under section 223(c)(2)(A) of the Internal Revenue Code (Code) will not fail to be an HDHP under section 223(c)(2)(A) merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a
deductible below the minimum deductible (self only or family) for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual under section 223(c)(1) who may make tax-favored contributions to a health savings account (HSA).
Part 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 under
2 sections 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.
Section 223 of the Code permits eligible individuals to deduct contributions to
HSAs.1 Among the requirements for an individual to qualify as an eligible individual
under section 223(c)(1) is that the individual is covered under an HDHP and have no
disqualifying health coverage. As defined in section 223(c)(2), an HDHP is a health plan
that satisfies certain requirements, including requirements with respect to minimum
deductibles and maximum out-of-pocket expenses.
Due to the unprecedented public health emergency posed by COVID-19, and the
need to eliminate potential administrative and financial barriers to testing for and
treatment of COVID-19, a health plan that otherwise satisfies the requirements to be an
HDHP under section 223(c)(2)(A) will not fail to be an HDHP merely because the health the plan provides medical care services and items purchased related to testing for and
treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible. As a result, the individuals covered by such a plan will not fail to be eligible individuals
under section 223(c)(1) merely because of the provision of those health benefits for
testing and treatment of COVID-19.
Tax-favored contributions may also be made on behalf of eligible individuals by their employers.
See Q&A 19 of Notice 2004-2. (2004-2 I.R.B. 269).
3. This guidance does not modify previous guidance with respect to the
requirements to be an HDHP in any manner other than with respect to the relief for
testing for and treatment of COVID-19.
Vaccinations continue to be considered
preventive care under section 223(c)(2)(C) for purposes of determining whether a health
plan is an HDHP. This notice provides flexibility to HDHPs to provide health benefits for testing and
treatment of COVID-19 without application of a deductible or cost-sharing. Individuals
participating in HDHPs or any other type of health plan should consult their particular
health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost-sharing.
The principal author of this notice is Jennifer Solomon of the Office of Associate
Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes),
though other Treasury Department and IRS officials participated in its development. For further information on the provisions of this notice, contact Jennifer Solomon at (202) 317-5500 (not a toll-free number).