September 29, 2020

Volume X, Number 273

September 29, 2020

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September 28, 2020

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IRS Provides Relief to Individuals and Families Covered Under High Deductible Health Plans to Encourage Testing for and Treatment of COVID-19

As part of the federal government’s rapidly evolving response to the impact of the 2019 Novel Coronavirus (COVID-19), the IRS has announced that individuals covered under a high deductible health plan (HDHP) will not lose their eligibility to make or receive pre-tax contributions to a health savings account (HSA) merely because their health plan provides benefits associated with testing for and treatment of COVID-19 before the HDHP’s ordinary minimum deductibles are met. In other words, if a sponsor of a health plan so chooses (and modifies its plan accordingly), the plan may generally cover COVID-19-related health benefits before an individual or family incurs the amount of out-of-pocket health costs that would normally be required before a plan could pay these benefits. Other requirements for a health plan to qualify as an HDHP, and a covered individual’s resulting eligibility to participate in a tax-favored HSA, remain the same.

HDHP Health Insurance Deductibles

As a reminder, a deductible in health insurance is the amount that an individual must pay for many of a plan’s covered health care services before that plan starts to pay. For example, if you are enrolled in an HDHP that has a $2,500 deductible, you must generally pay the first $2,500 of that plan’s covered services yourself before the plan provides its covered health benefits. In 2020, the minimum deductibles set by the IRS for a health plan to qualify as an HDHP is $1,400 for individuals and $2,800 for families. In reality, though, many HDHPs set deductibles that are significantly higher than these minimum amounts required by the IRS for eligibility to participate in a tax-favored HSA.

IRS COVID-19 Testing and Treatment Guidance

In its recent COVID-19 guidance, Notice 2020-15, the IRS announced that “all medical care services received and items purchased associated with testing for and treatment of COVID-19” that are covered by a plan without a deductible, or with a deductible below the minimum annual deductible otherwise required by the Internal Revenue Code and the IRS, will be disregarded for purposes of determining whether a health plan qualifies as an HDHP.

As the IRS also points out in its recent guidance, under existing law, HDHPs may cover certain services to individuals before their deductibles are met, such as certain preventive services like checkups and vaccinations. However, with the IRS’s COVID-19 guidance being issued so recently, individuals enrolled in high deductible health plans would be well-advised to contact their plans to find out if their plan will cover COVID-19-related testing and treatment without the imposition of their ordinary deductibles.

©2020 von Briesen & Roper, s.cNational Law Review, Volume X, Number 80

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About this Author

Doris Brosnan, Von Briesen Roper Law Firm, Milwaukee, Labor and Employment, Health Care and Immigration Law Attorney

Doris Brosnan is a Shareholder in the firm’s Labor and Employment Law Section, and focuses exclusively on assisting clients with employment issues. Doris regularly advises health care, corporate and public sector clients on dealing with disloyal or difficult employees, accommodating disabilities in the workplace, harassment, workplace violence, FMLA, and the development of effective employment policies and practices. She regularly assists clients in preparing and implementing employee transition plans, including employment due diligence in mergers and acquisitions,...

414-287-1405
Jill Pedigo Hall, Von Briesen Roper Law Firm, Madison and Milwaukee, Labor and Employment Law Attorney

Jill Pedigo Hall partners with businesses to develop and implement best practices, strategies, and solutions that ensure compliance with labor and employment laws while supporting business goals. She is recognized for leveraging her business acumen, insights, and experience to solve employment law issues and manage risks with an efficient, practical approach for employers of every size. She is widely regarded by her colleagues and clients as a perceptive and resourceful litigator and has an AV Pre-eminent® rating with Martindale-Hubbell, the highest peer rating possible.

A focal area of Jill’s practice is medical leave management involving FMLA and disability accommodations, wage and hour issues, and OFCCP compliance. She assists employers in coordinating workforce reductions, and routinely drafts policies, employment contracts, and restrictive covenant agreements. Her experience includes successfully managing litigation defense and representing corporate clients before federal/state courts and administrative agencies including EEOC, DOL, and OFCCP.

Jill frequently lectures and conducts in-house management and supervisor training for human resource organizations and clients of all sizes in the areas of medical leave management, wage and hour, social media and electronic communication management, affirmative action and illegal harassment.

Jill is a member of the Defense Research Institute (DRI) Employment and Labor Law Steering Committee and Chair of the Affirmative Action Sub-Committee. She is also a member of the State Bars of Wisconsin and Minnesota, the Milwaukee Bar Association, the Labor and Employment Division of the American Bar Association, the Industry Liaison Group (ILG) – Milwaukee District of the OFCCP Midwest Region, and the Society of Human Resources Management. 

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Bob Simandl, Von Briesen Law Firm, Waukesha, Labor and Employment Law Attorney

Bob Simandl is a Shareholder with over 30 years of experience advising clients on a wide range of employee benefit, labor and employment law issues. This experience enables Bob to advise clients on human resources (HR) law issues taking into consideration all areas of opportunity and vulnerability, including the litigation of HR law-based claims. He has extensive experience in advising employers in employee benefit plan design, issues associated with ill and injured workers, labor negotiations, and multi-employer health and welfare plan and pension plan vulnerability and compliance.

(262) 923-8651