COVID-19 coverage without a deductible ends next year

High-deductible health plans (HDHPs) will generally no longer be permitted to cover testing for and the treatment of COVID-19 without a deductible or with a deductible below the minimum deductible (for self-only or family coverage) for an HDHP as of the end of 2024, the IRS said Friday in Notice 2023-37.

The notice puts a deadline on the relief described in Notice 2020-15, issued in March 2020, by saying it applies only to plan years ending on or before Dec. 31, 2024.

Under Notice 2020-15, an HDHP will still qualify as an HDHP even if it provides payment for medical care services and items purchased related to testing for and treatment of COVID-19 before satisfying the applicable minimum deductible that normally applies to an HDHP. As a result, individuals covered by an HDHP will not fail to be eligible individuals under Sec. 223(c)(1) (who may make tax-favored contributions to a health savings account) merely because of the provision of those health benefits for testing and treatment of COVID-19.

Notice 2023-37 cites the announced end of the COVID-19 public health emergency on May 11, 2023, as the reason for the change in treatment of coverage for testing and the treatment of COVID-19.

Notice 2023-37 also clarifies whether certain items and services are treated as preventive care under Sec. 223(c)(2)(C). Specifically, the notice clarifies that the preventive care safe harbor as described in Notice 2004-23 does not include screening (i.e., testing) for COVID-19, effective as of the notice’s publication date. Items and services recommended with an “A” or “B” rating by the United States Preventive Services Task Force on or after March 23, 2010, are treated as preventive care for purposes of Sec. 223(c)(2)(C), regardless of whether these items and services must be covered, without cost sharing, under Public Health Service Act Section 2713.

Notice 2023-37 will be in IRB 2023-30, dated July 24, 2023.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.