IRS Modifies Applicability of HDHP Relief, Notice 2023-37

In light of the end of the COVID-19 public health emergency, the Treasury Department and the IRS have released guidance modifying prior guidance regarding benefits related to testing for and treatment of COVID-19 that can be provided by a high deductible health plan (HDHP). Specifically, the relief described in Notice 2020-15, which provides that a health plan will not fail to be a HDHP if it provides benefits related to the testing and treatment of COVID-19 prior to the satisfaction of a deductible, applies only with respect to plan years ending on or before December 31, 2024.

For subsequent plan years, a high deductible health plan (HDHP) is not 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 or family coverage) for an HDHP.

Preventive Care Safe Harbor

Generally, an HDHP is not permitted to provide benefits for any year until the minimum deductible for that year is satisfied. However, an HDHP may provide preventive care benefits without a deductible, or with a deductible below the minimum annual deductible. The preventive care safe harbor described in Notice 2004-23, I.R.B. 2004-15, 725 includes screening services but generally not any service or benefit intended to treat an existing illness, injury, or condition, such as the flu. The guidance clarifies that the preventive care safe harbor therefore does not include screening for COVID-19. If COVID-19 testing were to be recommended with an “A” or “B” rating by the USPSTF, then that testing would be considered preventive care under Code Sec. 223(c)(2)(C).