One of the special rules that applied during the COVID-19 pandemic allowed for HSA-compatible high-deductible health plans (HDHPs) to cover reduced cost (or free) COVID-19 testing and treatment prior to the enrollee satisfying the plan’s minimum deductible. Last week, IRS indicated that due to the end of the COVID-19 national emergency (NE) and public health emergency (PHE), the special rule for HDHPs will only apply for plan years ending on or before Dec. 31, 2024. In other words, for subsequent plan years, an HDHP cannot provide reduced-cost COVID-19 testing and treatment prior to satisfaction of the plan’s minimum deductible.

Lockton Comment: For calendar year plans, this means that reduced-cost COVID-19 testing and treatment can be covered by an HDHP through Dec. 31, 2024. For non-calendar year plans, the relief applies through the plan year that ends in 2024 (e.g., for a July 1 plan year, through June 30, 2024).

The latest IRS guidance does not impact the requirement for non-grandfathered health plans to provide COVID-19 vaccines as in-network preventive care without cost-sharing (or out-of-network if no in-network provider can provide the service). IRS noted if and when the United States Preventive Services Task Force (USPSTF) recommends COVID-19 testing with an “A” or “B” rating, then that testing would be treated as preventive care for purposes of the HDHP.

Next Steps

Thankfully, the IRS guidance provides adequate lead time for HDHPs to come into compliance. The plan sponsor will need to notify participants of any plan design changes and a formal plan amendment could be required.

The Lockton Compliance Consulting team will continue to monitor USPSTF recommendations and will alert you to any developments impacting coverage of COVID-19 testing and treatment. Our April 2023 alert (opens a new window) contains additional information on how the end of the COVID-19 NE and PHE impact employee benefit plans. Download alert (opens a new window)