It’s Official: Coronavirus Screening and Treatment Covered Pre-Deductible for HDHPs

The Internal Revenue Service and the U.S. Treasury issued guidance this week to employers stating coronavirus screening and treatment can be provided through a high deductible health plan (HDHP) without participants first having to satisfy the plan’s deductible.

According to the American Benefits Council, many companies have been seeking assurances from the federal government that by providing COVID-19 screening on a pre-deductible basis would not disqualify the HDHP from being coupled with an HSA. IRS Notice 2020-15 affirms that an HDHP will not fail to be an HDHP because it provides screening and treatment of the 2019 Novel Coronavirus (COVID-19) without a deductible, or with a deductible below the minimum deductible for an HDHP.

coronavirus screening and testing information for HDHP

For self-insured organizations with an HDHP, this notice allows the plan to cover coronavirus testing at 100% pre-deductible. The guidance also allows the plan to consider costs for coronavirus treatment to be pre-deductible.

Fully-insured organizations should check with your insurance provider to find out how they will be administering coronavirus testing and treatment.

Set Benefit Coverage with Your Plan Administrator

To set the benefit coverage for coronavirus testing and treatment, self-insured organizations will need to determine the coverage level desired (e.g. 100% for screening) and contact the plan administrator. Confirm that the benefits coverage should be applied to all of your organization’s medical plans – not just the HDHP

Communicate with Employees

Once you’ve made the decision to cover COVID-19 testing at 100%, be sure to include that message as you remind employees how to prevent the spread of the coronavirus. Participants in your medical plans should be told:

  • Coronavirus screening is covered at 100% without the deductible
  • Benefits for treatment of coronavirus are included in the plan, without having to satisfy the annual deductible

Vaccinations Continue to Be Preventive Care

Included in IRS Notice 2020-15 is confirmation that vaccinations continue to be considered preventive care and can be covered pre-deductible. Plan participants should be reminded of the importance to receive immunizations according to the CDC’s recommended schedule.

For questions about this topic, contact your Findley consultant or info@findley.com

Published March 13, 2020

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6 Best Practices to Consider When Introducing a Qualified High Deductible Health Plan

Organizations interested in designing a qualified high deductible health plan (QHDHP) have many variables to consider. Begin by developing a strategy that aligns with your company’s goals using these six best practices to guide your efforts.

Background

One of the most common types of health plans that are offered by employers today are QHDHPs. These plans have only been around since 2003 and continue to grow in popularity (66% of Midwest companies with over 500 employees offer an HSA-eligible HDHP[1]).

QHDHPs have minimum thresholds as set by the IRS to keep them qualified and eligible for Health Savings Account (HSA) contributions. The 2019 minimum deductibles and maximum out of pocket limits as set by the IRS are as follows:

  • Deductibles (Single/Family): $1,350/$2,700
  • Maximum Out of Pocket (Single/Family): $6,750/$13,500

One of the biggest advantages provided to those enrolled in a QHDHP, is the ability to fund money for qualified health expenses into the HSA. HSAs are able to be funded with contributions made by both the employee and employer.

Advantages for those enrolled in a QHDHP (known as the “Triple Tax Advantage”) with an HSA are:

  1. Contributions into these accounts are pre-tax
  2. The interest earned on the account grows tax-free.

Withdrawals from the HSA, for qualified health expenses, are tax free.

Best Practices

Unfortunately some employers offer this type of plan only with the intent on cost savings. If your intent is to make this a viable and meaningful alternative for your employees, to promote accountability and to encourage healthcare consumerism, then consider the following best practices in designing your plan:

  • Employer HSA contribution: Helping to fund the HSA accounts and bridge the gap of a higher deductible will demonstrate to your employees that you value this plan offering. When making a contribution, consider offsetting 30-40% of the deductible so that the contribution is also meaningful.
  • Consider a 3-year commitment to the HSA contribution: A three-year commitment for an employer contribution helps give peace of mind to employees that this is not just a one-time incentive and demonstrates this plan is valued by their employer and is viewed as a long-term strategy.
  • Prescription coinsurance or copays after deductible (to promote continued consumerism): Offering drug benefits tied to coinsurance or copays after the deductible is met will continue to promote the consumerism aspect of these plans. Members may be more inclined to continue to look for lower-cost alternatives such as generics.
  • Evaluate cost and transparency tools: Employees will need information to allow them to be consumers of health care. Employers should research the cost transparency tools their vendor offers. This helps employees enrolled in the plan make informed decisions on where to go for their care. Depending on your vendor’s capabilities, consider evaluating a carve-out solution for cost and transparency.
  • Communication/Communication/Communication: Remember that not everyone is a health care expert. If employers want a successful QHDHP adoption, a strong communication strategy is needed. Ideally this involves multiple steps starting with an overview of what a QHDHP plan is followed by plan selection support.
  • Does this align with current benefits strategy and offerings? Consider the plans in place today and what the net impact to the employer would be (gross funding rate, less employee premium contributions, plus any employer HSA contribution = Net Funding by the Employer). When setting up the plan, factor in the company’s cost impact to determine how much employees may contribute to the premium (cost of the plan) or how much employers should fund into an HSA.

In Perspective

Whatever your reason for offering a QHDHP, cost savings, offering employees more choice, or attracting and retaining employees, a formal strategy is essential to ensure alignment with your company’s goals.

Questions? For additional information about developing or enhancing your strategic plan, contact the Findley consultant you normally work with, or Blake Babcock at Blake.Babcock@findley.com or 216.875.1904.

[1] 2017 Mercer National Survey of Employer-Sponsored Health Plans

Posted November 26, 2018

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