On March 11, 2020, the IRS issued Notice 2020-15, to address an important coronavirus issue for high-deductible health plans that are coordinated with health savings accounts (“HSAs”).  The guidance paves the way for health plans to waive or reduce deductibles for any “medical care services and items purchased relating to testing for and treatment of COVID-19,” without affecting eligibility to make HSA contributions.

In general, employees may make and receive contributions to HSAs only if they are enrolled in a “high deductible” health plan.  With limited exceptions, covering medical expenses before the minimum deductible is reached would make employees ineligible to make or receive HSA contributions, and would subject employees who have made HSA contributions to an excise tax.  The HSA rules generally have an exception for “preventive” care, but not for services and items purchased to treat a disease.

The new guidance expands the scope of the “preventive” care exception, but is limited to testing and treatment of COVID-19.  Treatments for other conditions and diseases remain subject to the minimum deductible rules.

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Photo of Seth Safra Seth Safra

Seth J. Safra is a partner in Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional…

Seth J. Safra is a partner in Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined benefit to cash balance and floor-offset arrangements, ESOPs and 401(k) plans—often coordinating qualified and non-qualified arrangements. Seth also advises on ERISA compliance for investments, including the U.S. Department of Labor’s new conflict of interest (fiduciary) rules.

On the health and welfare side, Seth helps employers provide benefits that are cost-effective and competitive. He advises on health plans with HSAs and HRAs and also on severance and fringe benefit arrangements.