COVID-19 Testing and Treatment: Copays, Deductibles, and HSA Implications

Due to the rapid spread of the COVID-19 virus, the IRS recently issued Notice 2020-15 regarding health plan coverage for testing and treatment of the virus. See https://www.irs.gov/pub/irs-drop/n-20-15.pdf.

Generally, a High Deductible Health Plan (HDHP) cannot pay for tests or treatment before the normal annual minimum deductible has been met. In 2020, the HDHP minimum annual deductible must be at least $1,400 for individual coverage and $2,700 for family coverage. Per Notice 2020-15, a high deductible plan can pay for all COVID-19 testing and treatment before the normal annual minimum deductible is met. Due to the timing of the COVID-19 pandemic, many participants may not have hit their plan’s annual deductible limit, so covering COVID-19 testing and treatment without copayments or before meeting the annual minimum deductible, with or without copayments or coinsurance, would be a significant benefit to anyone affected. Likewise, non-HDHP plans should consider whether plan changes are appropriate to provide for testing and treatment without any copays, coinsurance, or deductibles.

Sponsors of self-insured plans should consider whether their plans should be amended to allow for COVID-19 testing and treatment with or without copays, coinsurance, or prior to meeting annual minimum deductibles. If such a change is made, employers should promptly notify plan participants. Participants could take such a notice with them to a provider who may question whether testing and treatment is covered under the plan.

Sponsors of insured plans should be in contact with their carriers as many have already announced they will cover testing and treatment without copays, coinsurance, or deductibles and many states have recently ordered insured plans (which are subject to state regulation) to provide such coverage.

Further, participants in plans that pay for diagnosis or treatment prior to the participant reaching the applicable deductible threshold (non-HDHP plans) are normally not eligible to contribute to Health Savings Accounts (HSAs). However, per Notice 2020-15, if a HDHP plan provides COVID-19 testing and treatment to the participant before the minimum deductible is met, participants will still be allowed to make HSA contributions. This exception does not apply to diagnosis or treatment other than for COVID-19.

Issues surrounding the COVID-19 virus are changing rapidly. Should you have questions regarding this Alert or health plan or health care issues related to COVID-19, please contact a member of Fennemore’s ERISA and Employee Benefits Practice Group or one of its health care attorneys.