In the most recent sign that special COVID-19 benefit plan rules are drawing to a close, last Friday, the IRS issued Notice 2023-37, which clarifies the scope of COVID-19 testing and treatment that can be provided on a pre-deductible basis under a high deductible health plan (HDHP) without impacting a participant’s ability to contribute to a health savings account (HSA).  As a reminder, if an HDHP covers medical items and services before the participant satisfies the IRS minimum deductible (self-only or family), that coverage may disqualify the participant’s HSA contributions.  Notice 2023-37 can be downloaded here.

Can an HDHP continue to provide pre-deductible coverage of COVID-19 testing and treatment without impacting HSA eligibility?

Yes, for a limited time.  Notice 2023-37 confirms that an HDHP can provide pre-deductible coverage of COVID-19 testing and treatment for plan years ending on or before December 31, 2024.  For subsequent plan years, the HDHP may continue to cover COVID-19 testing and treatment subject to the plan’s minimum deductible.   In essence, this guidance puts a deadline on IRS Notice 2020-15, which provided that an HDHP could cover medical items and services relating to COVID-19 testing and treatment without impacting participant eligibility to make HSA contributions.

As an alternative, can an HDHP treat COVID-19 testing as a screening test covered by the preventive care safe harbor?

No.  An HDHP may cover, on a pre-deductible basis, items and services that fall within the preventive care safe harbor without disqualifying the participant’s HSA contributions.  In Notice 2004-23, the IRS identified screening services for several infectious diseases covered by the preventive care safe harbor.  In Notice 2023-37, the IRS clarified that screening for COVID-19 testing is not covered by the infectious disease screening services listed in Notice 2004-23, reasoning that the list does not include screenings for common and episodic illnesses, such as the flu.

Can an HDHP provide pre-deductible coverage of “A” and “B” items recommended by the USPSTF on or after March 23, 2010, regardless of whether cost-sharing is imposed?

Yes.  In Notice 2013-57, the IRS confirmed that an HDHP could provide pre-deductible coverage of ACA-mandated preventive care services required to be covered without participant cost-sharing.  Readers of our prior blog may remember that in response to the district court’s decision in Braidwood Management, Inc. v. Becerra, the agencies confirmed that until further notice, an HDHP could provide pre-deductible coverage of USPSTF-recommended “A” and “B” services on or after March 23, 2010, regardless of whether those services were subject to participant cost-sharing.

In Notice 2023-37, the IRS confirmed that if the USPSTF were to recommend COVID-19 testing with an “A” or “B” rating, an HDHP could treat COVID-19 testing as preventive care eligible for pre-deductible coverage without respect to whether cost-sharing is imposed.  However, because the USPSTF has yet to recommend COVID-19 testing as an “A” or “B” service, this prospect remains hypothetical for the time being.

Takeaways for plan sponsors?

Recent years have seen a flurry of temporary changes regarding the scope of the pre-deductible coverage rules for HDHPs, including a temporary extension of the telehealth safe harbor.  The IRS’s recent guidance on COVID-19 testing and treatment marks another (time-limited) eligible expense that plan sponsors will need to track as they monitor the scope of permissible expenses that can be covered under an HDHP before a participant satisfies the IRS minimum deductible.