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COVID-19 Update: HDHPs to Provide First-Dollar Coverage for Testing and Treatment

Blog - HDHPs to Provide First-Dollar Coverage for Testing and Treatment

For several weeks, the employer community has petitioned the IRS to issue new guidance on the use of high-deductible heath plans (HDHPs) and health savings accounts (HSAs) to pay for Coronavirus (COVID-19) testing and treatment.

On March 11, the IRS set out new guidance in Notice 2020-15:

“To facilitate the nation’s response to the 2019 Novel Coronavirus (COVID-19), this notice provides that [...] a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) [...] will not fail to be an HDHP [...] 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.”

Above is an excerpt from Notice 2020-15. Read the full notice here.

What does this mean?

Simply, it means that any HDHP can be used to cover the costs of COVID-19 testing and treatment even before the deductible is met.

In other words, HDHPs can provide first-dollar coverage for Coronavirus-related costs.

Prior to last week, using an HDHP to cover COVID-19 testing and treatment before the deductible is met would have invalidated a plan’s HDHP status and benefits. To make matters worse, plan holders would have lost their eligibility to contribute to an HSA.

Following Notice 2020-15, this is no longer the case. The ruling gives employers the opportunity to support staff during this difficult time without causing any unintended consequences.

Further, treatment and testing for COVID-19 are now considered a qualified medical expense under HDHPs. That means consumers can also use HSA funds to pay for COVID-19 related expenses, including any associated travel costs.

Is anything else changing?

At the time of publishing this post, no.

However, a measure has been introduced to the House of Representatives which would require health insurers to cover the cost of COVID-19 testing.

If passed, the measure will see Coronavirus testing added to the ACA preventative care mandate list. That means health insurers would be required to cover the cost of testing (without cost-sharing) for any U.S. citizen that has health insurance through their employer or the ACA exchange.

In its current form, the measure would not require health insurers to cover the cost of COVID-19 treatment.

For additional insight into managing uncertainty in employee benefits, download the ebook COVID-19: Next Steps for HR & Benefits Leaders.