Sharon L. Lippett, Member of the Firm in the Employee Benefits practice, in the firm’s New York office, authored an article in the Bloomberg Tax Management Compensation Planning Journal, titled “IRS Grants Covid-19 Relief for High-Deductible Health Plans—but More Is Needed.”
Following is an excerpt (see below to download the full version in PDF format):
In response to the unprecedented public health emergency posed by the 2019 novel coronavirus (Covid-19), the IRS issued Notice 2020-15, the “Notice,” to allow a high-deductible health plan (HDHP) to permit testing for, and treatment of, Covid-19 without a deductible, or with a deductible below the minimum deductible for an HDHP. An HDHP is a health plan that satisfies requirements under §223, for employers offering health savings accounts (HSAs). Section 223 imposes strict requirements on HDHPs with respect to minimum deductibles and maximum out-of-pocket expenses. These limitations were one of the biggest hurdles facing employers in waiving copays or cost sharing for Covid-19 testing and treatment under their HSA-HDHP arrangements.
Section 223 provides that, to be eligible for an HSA, an individual cannot be covered by a health plan that is not an HDHP.2 The IRS further clarified this restriction in Rev. Rul. 2004-38, which ruled that an individual covered by an HDHP and also by a rider that provided benefits before the minimum annual deductible of the HDHP had been satisfied was not an eligible individual for HSA purposes.
