New guidance from the Internal Revenue Service (IRS) allows high-deductible health plans (HDHPs) to cover both testing and treatment for COVID-19, the disease caused by the novel coronavirus.
This announcement is significant in that not only did the IRS clarify that testing for COVID-19 is considered “preventative” care, it went further to say that treatment of the disease can also be covered before the employee’s deductible is met.
This guidance allows full coverage for treatment, but does not require it.
Employers that are self-insured should consider how they plan to respond to this guidance and contact their claims representative. Those with fully insured HSA-eligible health plans should contact their insurer to discuss next steps. Employers should communicate with their plan participants on their approach to what is covered prior to meeting their deductible.
This change also impacts the Limited Purpose Flexible Spending Account (LPFSA). In cases where treatment costs are not covered by the HDHP, the LPFSA will now be able to reimburse costs related to COVID-19 while still remaining compatible with the HSA. Employers offering an LPFSA should contact their providers to see when they will be able to accept claims for these services.
“This notice provides flexibility to HDHPs to provide health benefits for testing and treatment of COVID-19 without application of a deductible or cost sharing,” the IRS states. “Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing.”