HDHPs Can Cover Coronavirus Costs Without a Deductible
Key Points
- Employer-sponsored group health plans must cover COVID-19 testing, without imposing a deductible, copayment or other cost sharing.
- HDHPs can pay for COVID-19 testing and treatment before the deductible is met without jeopardizing their status as HSA-compatible.
- HDHPs can also pay for telehealth services before applying a deductible.
According to the IRS, HDHPs can pay for COVID-19 testing and treatment before an individual has met the plan’s deductible for the year.
On March 11, 2020, the Internal Revenue Service (IRS) issued Notice 2020-15 to allow high deductible health plans (HDHPs) to pay for COVID-19 testing and treatment before plan deductibles have been met, without jeopardizing their status. The IRS also noted that any COVID-19 vaccination costs count as preventive care and can be paid for by an HDHP without cost sharing.
Effective March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) allows HDHPs to provide benefits for telehealth or other remote care services before plan deductibles have been met, for plan years beginning before Jan. 1, 2022.
HDHP Coverage Requirements
Only individuals who are covered by HDHPs can make contributions to HSAs. To qualify as an HDHP, a health plan cannot pay medical expenses (other than preventive care) until the annual minimum deductible has been reached. IRS Notice 2020-15 and the CARES Act provide exceptions to this general rule to encourage testing for and treatment of COVID-19.
In addition, effective March 18, 2020, the Families First Coronavirus Response Act (FFCRA) requires group health plans and health insurance issuers to cover COVID-19 testing without imposing any cost sharing (such as deductibles, copayments or coinsurance) or prior authorization or other medical management requirements.
Action Steps
Employers with HDHPs should consult with their plan’s issuer or benefits administrator regarding their plan’s benefits for COVID-19 testing and treatment.
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Judy Kamens
Compliance Specialist
Judy joined the Employee Benefits division of Lawley in March 2010 as a Compliance Specialist. Judy’s role is to provide clients with enhanced service in the areas of new and existing legislation and compliance. She works closely with Employee Benefits Consultants and Account Executives to provide clients with the tools and information to remain compliant. Judy provides timely education, guidance and conveys the requirements and intricacies of new legislation in a practical fashion. Specifically, Judy has focused her attention on the Affordable Care Act (ACA) and possesses a thorough understanding of the continuously evolving requirements of this law.
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