On June 23, 2023, the Internal Revenue Service (IRS) issued Notice 2023-37, clarifying that a high-deductible health plan (HDHP) can provide coverage for COVID-19 testing and treatment before the minimum HDHP deductible (for self-only or family coverage) is met only for plan years ending on or before December 31, 2024. After 2024, covering COVID-19 testing and treatment under an HDHP without participant cost-sharing, could impact a participant’s Health Savings Account (HSA) eligibility.
Notice 2023-37 also provides that COVID-19 testing will not be considered preventative care for purposes of HSA eligibility as of the Notice’s publication date (June 23, 2023). However, if the United States Preventive Services Task Force (USPSTF) were to recommend COVID-19 testing with an “A” or “B” rating in the future, then that testing would be treated as preventive care for HSA eligibility purposes, regardless of whether participant cost-sharing is required for coverage under the preventive services mandate.
This Notice modifies the earlier 2020 guidance under IRS Notice 2020-15 that provided the HDHP relief as a response to the pandemic but was deemed no longer needed after the end of the National and Public Health Emergencies.
Shorter Transition Period for Non-Calendar Plan Years
While effective immediately, the advance notice essentially provides relief by allowing HDHPs to continue to cover COVID-19 testing on a no- or low-deductible basis for a transitional time period.
While calendar year plans are required to apply the minimum HDHP deductible to COVID-19 testing and treatment beginning with the 2025 plan year, non-calendar year plans must make this change sooner. For example, a non-calendar year plan that ends on March 31, 2024, will only have the HDHP relief through March 31, 2024, as their 2024-2025 plan year will not end until after the December 31, 2024, cut-off.
Recommended Employer Action
Employers should be aware of this relief and may want to communicate to employees the end date so that they are aware of changes effective for plan years ending on or before December 31, 2024.
- IRS Notice 2023-37
- IRS Notice 2020-15
- Sequoia Foreword: [Updated]: COVID-19 Emergency Declarations Anticipated to Expire: Impact to Group Health Plans
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