Client Alert

Coverage for coronavirus tests and treatments do not impact HSA contribution eligibility

Under the Internal Revenue Code (Code), a taxpayer is ineligible to make pre-tax contributions to a health savings account (HSA) unless the taxpayer is covered by a high deductible health plan (HDHP). A plan will not qualify as a HDHP unless it satisfies Code minimum deductible and other requirements.

On March 11, 2020 the Internal Revenue Service (IRS) issued guidance to provide that a health plan will not lose HDHP status if it covers testing and/or treatment for coronavirus (COVID-19) for an individual before he or she satisfies the plan’s deductible or cost-sharing requirements. Consequently, a health plan can provide first dollar coverage for coronavirus testing and treatments without jeopardizing the ability of plan participants to make pre-tax HSA contributions. This guidance applies until the IRS issues further clarification.

IRS guidance does not require that a plan cover these services. Rather, it allows a plan to cover them at no charge to participants without jeopardizing HDHP status. If you have uncertainty about your plan’s coverage of costs related to COVID-19, you should review your plan document and/or summary plan description.