IRS guidance on first-dollar coverage for COVID-19 testing and treatment

Given the current spread of COVID-19 (coronavirus), and in response to employer concerns, the IRS issued Notice 2020-15, which provides that sponsors of health savings account (HSA)-qualifying high-deductible health plans (HDHPs) may cover testing and treatment for COVID-19 with reduced cost sharing or without any cost sharing (i.e., on a first-dollar basis). The IRS guidance aims to avoid administrative delays or financial disincentives that might impede testing for and treatment of COVID-19 for HDHP participants. The guidance remains in effect until further notice.

Notice 2020-15 does not modify previous guidance on the requirements to be an HDHP other than that related to the relief for testing and treatment of COVID-19. In addition, vaccinations continue to be considered preventive care under Internal Revenue Code section 223(c)(2)(C) for purposes of determining whether a plan is an HSA-qualifying HDHP.

This news should come as welcome relief for employers that sponsor HSA-qualifying HDHPs and are looking to cover the costs of COVID-19 testing and treatment for plan participants without application of a deductible, or with a deductible below the applicable minimum annual HDHP deductible amount.