Background

Under the Internal Revenue Code, HDHPs must satisfy certain requirements, including with respect to minimum deductibles. Generally, an HDHP is not permitted to provide benefits for any year until the minimum deductible for that year is satisfied.

However, in response to the COVID-19 Public Health Emergency, IRS Notice 2020-15 provided that a health plan that otherwise satisfies the requirements to be an HDHP would not fail to be an HDHP merely because it provided medical care services and items purchased related to testing for and treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible. (We discussed this guidance in our March 16, 2020 insight, “Group Health Plans and COVID-19: What You Need to Know.”)

Additionally, the Internal Revenue Code provides a safe harbor for the absence of a deductible under an HDHP for preventive care. (See Notice 2004-23.) Therefore, an HDHP may provide preventive care benefits before the deductible is satisfied or with a deductible below the minimum annual deductible otherwise required for an HDHP.

The new guidance

Notice 2023-37, which the IRS published on June 23, 2023, provides guidance on COVID-19 care and preventive care.

COVID-19 care

Having determined that the relief described in Notice 2020-15 is not needed after the end of the Public Health Emergency, Notice 2023-37 provides that HDHPs may continue to provide benefits related to testing or treatment for COVID-19 before satisfaction of the applicable minimum deductible only through plan years ending on or before December 31, 2024. After that time, COVID-19 testing and treatment benefits must be subject to the minimum deductible.

Preventive care

Although screening for certain conditions may be a preventive benefit that is payable before the deductible is met in an HDHP, Notice 2023-37 clarifies that effective June 23, 2023, the preventive care safe harbor does not include screening (i.e., testing) for COVID-19, although benefits for testing may continue to be provided through plan years ending on or before December 31, 2024.

Notice 2013-57 states that a health plan will not fail to qualify as an HDHP merely because it provides, without a deductible, the preventive care health services the ACA required be covered without cost sharing. Notice 2023-37 clarifies that the preventive safe harbor includes items and services recommended with an “A” or “B” rating by the USPSTF on or after March 23, 2010, regardless of whether those items and services must be covered without cost sharing under the ACA. These “A” and “B” designative services are the subject of current litigation, Braidwood v. Becerra, before the Fifth Circuit, which will decide whether they will continue to qualify as preventive care services under the ACA that must be provided without cost sharing. (We discussed that litigation in our June 15, 2023 insight, “Court Reinstates ACA’s Preventive Services Mandate.”)

Notice 2023-37 does not address coverage of COVID-19 vaccines by HDHPs, but generally non-grandfathered group health plans must cover these vaccines in network under recommendations issued by the Advisory Committee on Immunization Practices.

Implication for HDHP sponsors

Sponsors and administrators of HDHPs must make sure that testing and treatment provided for COVID-19 after the plan year ending in 2024 are subject to the applicable HDHP deductible.