IRS Issues Guidance Addressing COVID-19 and HSA Eligibility

On March 11, 2020, the IRS issued Notice 2020-15, which makes it clear that until further guidance is issued HDHP participants who receive COVID-19 testing or treatment without cost sharing will not lose HSA eligibility.

As background, HDHP participants are ineligible for HSA contributions if they receive first-dollar coverage for any health care that is not a preventive service. The agency recognizes that, under the circumstances, this prohibition could create administrative delays or financial disincentives to offer COVID-19 testing or treatment to HDHP participants.

To avoid those barriers, the IRS’ Notice has the effect of declaring that COVID-19 testing and treatment will not, alone, cause participants to be deemed HSA-ineligible. The notice also confirmed that any COVID-19 vaccination that is formulated will be considered preventive care like other vaccinations. Because of this guidance, employers and group health plans can proceed in offering these benefits to employees without being concerned about the HSA-eligibility of their participants.

Note that this guidance does not modify any other previous guidance regarding HDHP requirements.

Notice 2020-15  »