By: HUB’s EB Compliance Team
In IRS Notice 2023-37, the IRS has declared that COVID testing and treatment are not preventive care. This means they can only be provided under a high deductible health plan (“HDHP”) on a first dollar basis by plans which plan years end no later than December 31, 2024. HDHPs that continue to cover these services on a first dollar basis will cause their participants to be ineligible to contribute to health savings accounts (“HSAs”).
Additionally, the notice clarifies that COVID vaccines and items given an “A” or “B” rating by the US Preventive Services Task Force (“USPSTF”) will continue to be treated as preventive care. The mention of the USPSTF is a response to the Braidwood decision HUB discussed here (which still being reviewed in the courts) that invalidated preventive care services given those ratings on or after March 23, 2010. In other words, COVID vaccines and preventive services rated “A” or “B” by the USPSTF can continue to be covered before the deductible by HDHPs.
Next Steps
The good news for plan sponsors is that they have time to make changes to their plan design in response to this Notice. The ample runway given by the IRS is welcome. Specifically, plan sponsors with HDHPs should work with their insurance carriers and third-party administrators to stop covering COVID testing and treatment prior to the deductible, if they haven’t already. Nothing in this Notice requires plans to continue to cover COVID testing and treatment pre-deductible.
On the flip side, the guidance around COVID vaccines and USPSTF services is helpful clarification, but not surprising. Plan sponsors should continue to pay attention to the Braidwood litigation, but until then, can stay the course in covering the relevant preventive services.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
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Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.