Seyfarth Synopsis: In light of the end of the COVID-19 National Emergency and Public Health Emergency (see our prior blog post here), the Internal Revenue Service (“IRS”) has announced the end of prior COVID-19-related special rules for health plan coverage.

On June 23, 2023, the IRS issued Notice 2023-37 to clarify the compatibility of high deductible health plans (“HDHPs”) with health savings accounts (“HSAs”) under Section 223 of the Internal Revenue Code (“Code”). The Notice provides that HDHPs that are compatible with HSAs may continue to provide coverage for COVID-19 testing and treatment before the deductible is met only for plan years ending on or before December 31, 2024. After that, COVID-19 testing may be covered before the deductible is met only if and to the extent recommended as preventive care, including with an “A” or “B” rating by the United States Preventive Services Task Force (“USPSTF”).

As a reminder, in order to be able to contribute to an HSA, among other requirements, an individual must be enrolled in an HDHP that meets certain requirements. An HDHP must have an annual minimum deductible (for calendar year 2024, not less than $1,600 for self-only coverage or $3,200 for family coverage) that generally must be met before benefits may be provided by the HDHP. The major exception to that rule is for preventive care as defined under Code § 223(c)(2)(C) (the “preventive care safe harbor”).

With the onset on the COVID-19 pandemic, individuals covered under HDHPs found themselves needing to purchase testing for a COVID-19 diagnosis on a not infrequent basis. Normally diagnostic testing would not meet the definition of preventive care. Relief was issued by the IRS very early in the COVID-19 pandemic. Notice 2020-15 provided that a HDHP would not fail to be a HDHP merely because the plan provides coverage for medical care services related to testing and treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible.

In light of the end of the COVID-19 emergencies, Notice 2023-37 now provides and clarifies the following transition rules:

  • The relief previously provided by Notice 2020-15 is no longer needed, and will end with plan years ending on or before December 31, 2024. That is, for plan years after that date (e.g., for calendar year plans beginning on or after January 1, 2025), HDHPs generally may not provide coverage for COVID-19 testing or treatment without satisfying the applicable deductible.
  • Effective as of June 23, 2023, the Notice clarifies that the preventive care safe harbor no longer includes COVID-19 screening (testing).
  • However, the guidance also provides that if COVID-19 testing were to be recommended with an “A” or “B” rating by the USPSTF, then such testing would be treated as falling within the preventive care safe harbor, and first dollar coverage of COVID-19 testing would be permitted without risking the plan’s status as an HDHP. (This is true for any USPSTF-recommended (with an “A” or “B” rating) items or services regardless of their treatment under the Affordable Care Act.)

Please reach out to your Seyfarth Employee Benefits attorney to discuss the impacts of this guidance for your plan or if you need additional information.