HSA-Compatible Plans Can Offer No-Deductible Covid-19 Care: IRS

An illustration showing SARS-CoV-2 virions on the attack.

The Internal Revenue Service today issued an emergency ruling that could help keep worries about deductibles from getting in the way of Covid-19 pneumonia testing and care for holders of health savings accounts (HSAs).

The IRS says, in IRS Notice 2020-15, that HSA users with high-deductible health plan coverage can use their coverage to pay for testing for severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) — the virus that causes Covid-19 pneumonia — without having to satisfy the normal minimum deductible requirements for HSA-coverage.

HSA holders can also use their HSA-compatible coverage to pay for Covid-19 pneumonia care without meeting the usual minimum deductible requirements, the IRS says.

Resources

A link to a copy of IRS Notice 2020-15 is available here.
An earlier article about what state insurance regulators and health insurers are saying about SARS-CoV-2 testing and treatment coverage is available here.

The minimum 2020 deductible for a high-deductible health plan (HDHP) that's compatible with the HSA program is $1,400 for individuals and $2,800 for families.

The ruling applies to the federal income tax rules for HSAs, not to the health coverage issuers.

Most health insurers have been rushing to say that they will waive preauthorization requirements, deductibles, co-payment and coinsurance amounts for enrollees seeking SARS-CoV-2 testing. Many have also said they will waive cost-sharing amounts for enrollees who are getting care for Covid-19 pneumonia.

Regulators in California, Missouri, New York and many other states have been using emergency regulations, bulletins or voluntary agreements to arrange for state-regulated health insurers to waive cost-sharing requirements for SARS-CoV-2 and Covid-19 pneumonia care.

IRS Notice 2020-15 Details

Here's how the IRS describes the HSA deductible relief in the new notice:

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 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.

The IRS says in the notice that, to remove any barriers to testing and treatment during the public health emergency caused by Covid-19, "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 [Internal Revenue Code] Section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP."

Testing and treatment for SARS-CoV-2 will be covered under the umbrella of "preventive services."

The IRS cautions that the guidance only applies to the Covid-19 emergency and does not void any other requirements governing HDHPs and HSAs.

"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," according to the notice.

— Read Missouri Issues Covid-19 Emergency Rules Similar to New York's, on ThinkAdvisor.

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