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Coronavirus and HDHP and HSA-What you need to know

Thomas Torre
Mar 13, 2020 10:59:02 AM

If you’re an HSA user with an HSA-eligible high-deductible health plan (HDHP), you may be wondering how and if the coronavirus (COVID-19) impacts your HDHP and your HSA coverage. At Bend, we understand you have enough on your plate dealing with everything surrounding the COVID-19 pandemic, so we’ve got you covered with the latest updates regarding the coronavirus, your HSA and HDHP.

Your HDHP May Cover Coronavirus (COVID-19) Costs Pre-Deductible and Won’t Negatively Impact Your HDHP or HSA

On March 11, 2020, the IRS released IRS Notice 2020-15, an emergency ruling which relaxes the normal minimum deductible requirements HSA users typically face with their HDHP. This ruling is meant to ensure that the higher deductibles associated with HDHPs don’t get in the way of testing and care related to coronavirus for those with HSAs and HDHPs.

The intro of IRS Notice 2020-15 reads: “To facilitate the nation’s response to the 2019 Novel Coronavirus (COVID-19), this notice provides that, until further guidance is issued, a health plan that otherwise satisfies the requirements to be a high deductible health plan (HDHP) under section 223(c)(2)(A) of the Internal Revenue Code (Code) will not fail to be an HDHP under section 223(c)(2)(A) merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual under section 223(c)(1) who may make tax-favored contributions to a health savings account (HSA).”

You can read the complete notice here.

To summarize, all testing related to the coronavirus will be covered pre-deductible, and won’t violate HDHP rules or negatively impact your HDHP and HSA in any way. All major health insurers have waived the copays, coinsurance, and deductibles related to COVID-19 diagnostic testing provided at approved locations is accordance with the CDC guidelines for all commercial insured, Medicaid and Medicare members. Simply put, if you end up needing testing for the coronavirus, you do not have to satisfy the minimum deductible requirements typically laid out for your HDHP—all testing can be covered under the umbrella of preventive services. And when it comes to your HSA, it won’t affect your HSA eligibility or ability to make or receive HSA contributions—or any other HSA advantages—in any way. For information on how treatment will covered, please contact your insurance provider.

A final word of caution—this notice only applies to the coronavirus pandemic and doesn’t change any other requirements associated with HDHPs and HSAs. Along with that, always protect yourself and consult your particular health plan provider regarding your specific health benefits for testing and treatment related to COVID-19 provided by your specific plan. Be sure to get clarity on the potential application of any deductible or cost sharing.

A Reminder on HSA-Eligible HDHP Minimum Deductibles for 2020

As a reminder, for a high-deductible health plan (HDHP) to be eligible for a health savings account (HSA), the plan must meet certain minimum deductible requirements, set annually by the IRS.

For 2020, the minimum deductible for individual coverage is $1,400, and $2,800 for family coverage.

But, because of IRS Notice 2020-15, these deductibles don’t apply to any care related to the testing or treatment related to the coronavirus (COVID-19).

Rest Easy – All Your HSA Benefits Remain Intact

Throughout this coronavirus pandemic, you can take comfort in the fact that all your HSA benefits and advantages remain intact, even with the IRS’s decision to relax the minimum deductible requirements surrounding care related to the coronavirus (COVID-19).

From tax advantages and investment opportunities, to flexibility and convenience, HSAs provide many upsides. Here’s a quick refresher on just some of an HSA’s benefits and advantages:

  • HSAs provide triple tax savings
    • Your HSA contributions are 100% tax deductible
    • Your HSA funds can be used tax-free for any qualified medical expenses
    • Your HSA funds gain interest and grow tax-free
  • HSAs offer a dedicated savings account for medical expenses and can be used for a variety of healthcare costs
  • HSAs are portable and remain with you no matter what—regardless of job changes, health insurance plan changes or even retirement
  • HSAs allow for infinite rollovers with no “use it or lose it” scenario
  • HSAs allow for multiple contribution sources
  • HSAs provide you with additional investment opportunities

Be Smart. Be Safe. Be Informed.

Your HDHP and HSA might not be the first thing you think of when it comes to the coronavirus pandemic, but it’s a smart move to be informed about how it impacts your coverage, just in case.

For more general information and resources on the coronavirus and developments related to the pandemic, visit the CDC’s website, the World Health Organization’s coronavirus site or your specific state’s Department of Health online.

And remember, Bend is here to help. Get in touch with any questions you have on HSAs—we’re here for you. And we’ll post again with any further developments regarding the coronavirus, HDHPs and HSAs.

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