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IRS Issues Coronavirus Relief for High-Deductible Health Plans

Posted on Mar. 12, 2020

The IRS has issued guidance clarifying that providing benefits related to COVID-19 won’t violate the deductible rules for high-deductible health plans.

In Notice 2020-15, 2020-14 IRB 1, issued March 11, the IRS said that “until further guidance is issued, a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) . . . 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.”

The IRS said the relief was needed to help facilitate the response to the “unprecedented public health emergency.”

The notice says all medical services and any items purchased that are related to the testing for and treatment of COVID-19 won’t violate the deductible rules for HDHPs. This guidance is intended to “avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs.”

Preventive Care Developments

HDHPs can pay for only some benefits before the deductible is met, and the IRS regulates which medical services are considered “preventive care” that can be paid for outside the deductible.

The notice said it isn’t intended to modify previous guidance on HDHPs and added that “vaccinations continue to be considered preventive care under section 223(c)(2)(C) for purposes of determining whether a health plan is an HDHP.”

In June 2019 President Trump signed an executive order on healthcare that directed Treasury to consider expanding the definition of preventive care for chronic conditions. In July 2019 the IRS issued Notice 2019-45, 2019-32 IRB 593, which expanded the preventive care safe harbor in section 223(c)(2)(C) to cover beta blockers, insulin, and medication used to treat depression, among other prescriptions and treatments used for chronic conditions. However, that notice may have underscored that the preventive care definition is actually more restrictive than current industry practices.

In March 2018 the IRS issued Notice 2018-12, 2018-12 IRB 441, which said vasectomies and other forms of male contraception aren’t considered preventive, but the guidance included transition relief so that states requiring HDHPs to offer male sterilization or male contraceptives without a deductible would have time to update their laws.

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