Benefit News

IRS Allows High Deductible Health Plans To Cover Coronavirus Costs

March 12, 2020

On March 11, 2020, the Internal Revenue Service (IRS) issued Notice 2020-15 to advise that high deductible health plans (HDHPs) can pay for 2019 Novel Coronavirus (COVID-19) testing and treatment before plan deductibles have been met, without jeopardizing their status. According to the IRS, this also means that individuals with HDHPs that cover these costs may continue to contribute to their health savings accounts (HSAs).

The IRS also noted that any COVID-19 vaccination costs count as preventive care and can be paid for by an HDHP without cost sharing.

Health Plan Coverage

To protect the public from the growing spread of COVID-19, many states are directing or encouraging health insurance issuers to cover COVID-19 testing without imposing a deductible or other cost sharing. These states include California, New York, Oregon, and Washington. Some issuers are voluntarily waiving cost sharing for COVID-19 testing, without a state directive. Self-funded plans may also voluntarily waive these costs due to the public health emergency posed by COVID-19.

Only individuals who are covered by HDHPs can make contributions to HSAs. To qualify as an HDHP, a health plan cannot pay medical expenses (other than preventive care) until the annual minimum deductible has been reached. IRS Notice 2020-15 provides an exception to this general rule to remove financial barriers that might otherwise delay testing for and treatment of COVID-19.

Action Steps

Employers with HDHPs, in conjunction with their benefits broker, should consult with their plan’s issuer or benefits administrator regarding their plan’s benefits for COVID-19 testing and treatment, including the potential application of any deductible.

To obtain the latest updates regarding COVID-19, please visit the Centers for Disease Control website here.

For additional information, please contact your Burnham Benefits Consultant or Burnham Benefits at 949-833-2983 or inquiries@burnhambenefits.com.


Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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