In order to make contributions to a health savings account, an individual must be covered under a high deductible health plan (HDHP) and not covered under any plan that is not an HDHP. An HDHP is not permitted to pay any benefits prior to satisfaction of a specified minimum deductible; however, the plan may provide first dollar coverage for preventive care. The IRS recently issued its Notice 2023-17 which addresses previous guidance on what expenses can be covered by an HDHP before the deductible has been met.
COVID-19 Testing and Treatment
In March of 2020, in response to the COVID-19 pandemic, the IRS announced that an HDHP could provide benefits for testing for and treatment of COVID-19 prior to the satisfaction of the deductible. With the official end of the COVID-19 national emergency on April 10, 2023, the IRS has determined that the relief announced in March 2020 is no longer needed. HDHPs will be able to provide pre-deductible benefits for COVID-19 testing and treatment only during plan years ending on or before December 31, 2024.
The Affordable Care Act requires all health plans (including HDHPs) to cover certain services as preventive care without application of any cost-sharing. This includes items and services recommended with an “A” or “B” rating by the USPSTF on or after March 23, 2010. Earlier this year, a Texas district court found that that requirement of the ACA was unconstitutional, meaning that health plans could but were not legally required to cover the affected items and services. The decision was stayed on appeal and pending the outcome of that appeal, plans are still required to cover those items and services. In Notice 2023-17, the IRS clarified that even if the district court’s decision is ultimately upheld on appeal, an HDHP could still the affected items and services as preventive care. It specifically noted that should the USPSTF give COVID-19 testing an “A” or “B” recommendation as preventive care, that testing could be covered without coast sharing by an HDHP.