IRS announces end of COVID-19 relief for HDHPs after 2024


The IRS recently announced (Notice 2023-37) that high deductible health plans (HDHPs) generally will no longer be permitted to provide health benefits associated with testing for and treatment of COVID-19 without a deductible (or with a deductible below the minimum deductible for self-only and family coverage) for plan years ending after Dec. 31, 2024. 


Individuals generally are eligible to deduct contributions to Health Savings Accounts (HSAs) only if, among other requirements, the individuals are covered under an HDHP. These health plans must satisfy certain requirements, including that they generally cannot provide benefits for any year until the minimum deductible for that year is satisfied. However, there is a safe harbor allowing the absence of a deductible for certain preventive care.


In March 2020, due to the unprecedented public health emergency posed by COVID-19, the IRS provided relief (Notice 2020-15) allowing HDHPs to provide benefits for medical care services and items purchased related to testing for and treating COVID-19 prior to the satisfaction of the applicable minimum deductible. The IRS explained in Notice 2023-37 that this relief will be ending after 2024 following the May 11, 2023, end date of the COVID-19 National Emergency and public health emergency.


Notice 2023-37 also clarifies that, effective as of the date of publication of the notice, the preventive care safe harbor previously described in Notice 2004-23 would not include screening (i.e., testing) for COVID-19. The IRS explained that the safe harbor list of preventive care included in Notice 2004-23 includes “infectious disease screening services” for certain specified infections (e.g., Tuberculosis), but it does not include screenings for common and episodic illnesses, such as the flu. Accordingly, the IRS indicated that it is of the view that COVID-19 differs from the types of infectious diseases included on the current preventive care safe harbor list. 


However, the IRS also explained that items and services recommended with an “A” or “B” rating by the United States Preventive Services Task Force (USPSTF) are also treated as preventive services, and therefore, if COVID-19 testing were ever to be recommended with an “A” or “B” rating by the USPSTF, then COVID-19 testing would be treated as preventive care at that point in the future.



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