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HSA Eligibility Not Disrupted By COVID-19 (Novel Coronavirus) Testing And Treatment

A new IRS notice will allow individuals to receive testing and care for COVID-19 without jeopardizing their ability to contribute to a health savings account (HSA). The IRS issued the notice due to the public health threat posed by COVID-19, and the stated need to eliminate potential administrative and financial barriers to testing for and treatment of COVID-19.


On March 11, 2020, the Internal Revenue Service (IRS) issued Notice 2020-15. Under the Notice, individuals covered by a high-deductible health plan (HDHP) may receive benefits associated with testing for and treatment of COVID-19—commonly referred to as Novel Coronavirus—without a deductible, or with a deductible below the minimum deductible for a HDHP, prior to the individual meeting the minimum deductible without disqualifying them from making or receiving HSA contributions. This change will allow individuals to pursue testing and treatment for COVID-19 without fear of jeopardizing their ability to contribute or receive contributions to their HSA for necessary care that may otherwise be more difficult to afford.

Many employers have asked whether the Notice extends to the provision of telemedicine and other forms of virtual care. As of the date this article was published, the IRS has not specifically stated whether the Notice grants any relief from the HSA rules for the provision of telemedicine at no cost to individuals enrolled in HDHPs. However, to the extent any telemedicine services are provided for the testing or treatment of COVID-19 as described in the Notice, the relief in the Notice should apply. Telemedicine services for other forms of treatment or care outside of and not related to COVID-19 would not be covered by the Notice.

The IRS announcement comes on the heels of announcements by several states, including, for example, California, New York, Maryland and Washington, mandating that insured health plans provide without cost-sharing certain medically necessary screening and testing (and, in certain cases, care) for COVID-19. These state mandates apply only to insured health plans. Some health insurers have already announced their intention to comply with these mandates. Self-insured group health plans are subject to Federal law under the Employee Retirement Income Security Act of 1974 (ERISA), which generally preempts state law as applied to self-insured group health plans. Many employers with self-insured group health plans, however, have sought ways to expand health plan coverage in line with the state guidance, and the Notice provides a way for them to do so.

HSAs allow eligible individuals to use pre-tax dollars to pay for eligible health care expenses. One requirement to participate in an HSA is that an individual be covered under a HDHP and have no “disqualifying health coverage.” As a general rule, any benefits covered under the HDHP before the minimum deductible is satisfied constitute disqualifying health coverage. A limited exception exists for preventive care that allows coverage of certain services, procedures and medications to be covered by the HDHP before a participant meets their deductible without affecting the individual’s ability to contribute to an HSA. This exception was recently expanded by the IRS to include certain medical expenses that treat an existing chronic condition but also prevent exacerbation of the condition and/or a future secondary condition (see our previous On the Subject here). The Notice is a further expansion and liberalization of the rules in light of the public health threat posed by COVID-19.

© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 71



About this Author

Jacob Mattinson Employee Benefits Attorney

Jacob M. Mattinson focuses his practice on employee benefits and matters related to 401(k), 403(b), pension, executive compensation, health care reform, and cafeteria and welfare plans.

Jacob assists clients in drafting employee benefit plan documents and amendments. He represents clients in matters before the Internal Revenue Service (IRS), US Department of Labor (DOL) and Pension Benefit Guaranty Corporation with respect to plan qualification issues. He also counsels privately and publicly held corporations and tax-exempt entities on a variety of benefits and Employee Retirement...

Erin Turley McDermott Will employee benefits law attorney

Erin Turley focuses her practice on employee benefits matters. She has extensive experience handling issues pertaining to the Employee Retirement Income Security Act of 1974 (ERISA) and employee stock ownership plans (ESOPs).

With respect to ERISA, Erin focuses on employee benefits, including qualified, nonqualified, and executive and deferred compensation and welfare benefit plans, as well as on regulatory compliance with the Internal Revenue Code, ERISA, the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability and Accountability Act (HIPAA) and...

Judith Wethall, McDermott Law Firm, Chicago, Labor and Employment Law Attorney

Judith Wethall focuses her practice on employee benefits, specifically health and welfare programs. She counsels employers, plan administrators, insurers and consultants on a wide range of ERISA compliance issues. Judith's clients include sole proprietors to Fortune 100 companies and cover a variety of industries including health care, technology, manufacturing, insurance and financial.

Judith has extensive experience advising clients on health care law reform; wellness programs; Medicare secondary payor rules; fiduciary compliance; disability...