IRS Revises COVID Rules for HDHPs

In response to the pandemic, the IRS issued rules in 2020 that COVID-19 testing and treatment benefits could be provided by a High Deductible Health Plan (HDHP) without a deductible or with a deductible below the HDHP minimum deductible. That allowed employers or participants to make HSA contributions without violating the regular “no non-HDHP coverage” rule.

With the end of the COVID-19 emergency in 2023, the IRS has now issued a new Notice that says the relief described in the 2020 Notice is now out-of-date  and will no longer apply for plan years ending after December 31, 2024.

The Notice also specifically addresses how certain pandemic-related items and services treated as preventive care under the HSA eligibility rules are changing. For example, COVID-19 testing is no longer considered as a preventive servoce, effective immediately. However, the Notice differentiates screenings for “common and episodic illnesses, such as the flu”, which it says is not covered by this new Notice and are still considered preventive, from COVID-19 screenings.

Employers should closely examine this new Notice and communicate the changes that return us to pre-pandemic conditions for HDHPs and HSAs.