IRS Provides Guidance on HDHP Interaction with COVID-19 Preventative Care After End of National Health Emergency
The IRS has recently released Notice 2023-37. This Notice provides important clarifications on how COVID-19 preventative care (such as COVID-19 testing and treatment) is treated in relation to an HDHP now that the National Health Emergency has ended.
Normally, an HDHP cannot provide benefits to a plan participant in a plan year until the contractual deductible for that plan year is satisfied. However, the law makes a special exception in the form of a safe harbor: a deductible does not have to be satisfied for a calendar year if the benefits are for preventative care (as defined by Section 1861 of the Social Security Act).
During the COVID-19 National Health Emergency (beginning in March 2020), the IRS released a Notice (2020-15) which aimed to ease the burden on individuals who needed care. It instituted a rule where an individual who had an HDHP did not have to meet the deductible requirements to receive benefits for medical care services/items related to testing or treatment of COVID-19. Because of this, individuals did not have to wait for COVID-19 care during a National Health Emergency.
Fast Forward to May 11, 2023. The Secretary of Health and Human Services has declared the National Health Emergency over. This left the status of COVID-19 testing and treatment as excepted benefits in unclear territory. In response to this uncertainty, the IRS has released Notice 2023-37 to return HDHPs to a state of normalcy. As such, the deductible exceptions mentioned in Notice 2020-15 that provided for COVID-19 testing and treatment only apply to plan years ending on or before December 31, 2024. After that date, normal HDHP deductible rules apply to COVID-19. In effect, the IRS has determined that preventative care (testing) for COVID-19 does not meet the requirements for the preventative care safe harbor and the deductible must be met for all COVID-19 HDHP disbursements beginning in January of 2025.
You can read the entire IRS Notice HERE.