Compliance March 11, 2020

IRS OKs HDHP Coverage of Coronavirus Testing

High-deductible health plans (HDHPs) will not lose their special status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met.

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The Internal Revenue Service (IRS) has advised that high-deductible health plans (HDHPs) can pay for 2019 novel coronavirus, or COVID-19, testing and treatment without jeopardizing their status as HDHPs.

According to the IRS, this also means that an individual with an HDHP that covers these costs may continue to contribute to a health savings account (HSA).

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The IRS’s stance is detailed fully in Notice 2020-15, which was posted today on IRS.gov. In the notice, the IRS also explains that, as in the past, any vaccination costs continue to count as preventive care and can be paid for by an HDHP.

“Today’s notice applies only to HSA-eligible HDHPs,” the IRS states. “Employees and other taxpayers in any other type of health plan with specific questions about their own plan and what it covers should contact their plan.”

The IRS says part of the federal government’s response to COVID-19 is removing barriers to testing for and treatment of COVID-19.

“Due to the nature of this public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP,” the IRS states.

The IRS also clarifies that Notice 2020-15 “does not modify previous guidance with respect to the requirements to be an HDHP in any manner other than with respect to the relief for testing for and treatment of COVID-19.”

“This notice provides flexibility to HDHPs to provide health benefits for testing and treatment of COVID-19 without application of a deductible or cost sharing,” the IRS states. “Individuals participating in HDHPs or any other type of health plan should consult their particular health plan regarding the health benefits for testing and treatment of COVID-19 provided by the plan, including the potential application of any deductible or cost sharing.”

Compliance March 11, 2020

Invesco Agrees to Pay Nearly $3.5 Million to Settle Self-Dealing Claims

The firm has also agreed to offer non-proprietary ETFs in its 401(k) plan’s self-directed brokerage account.

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Parties in a lawsuit accusing fiduciaries of the Invesco 401(k) plan of loading the plan with proprietary investments have agreed to settle for $3,470,000.00.

In addition, the defendants agreed to modify the investment options offered through the plan’s self-directed brokerage account (SDBA) so participants will be permitted to invest in non-proprietary exchange-traded funds (ETFs) in addition to the proprietary ETFs offered to participants.

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The agreement says it is being entered into for settlement purposes only and “solely for the purpose of avoiding possible future expenses, burdens or distractions of litigation.” It further states that the defendants “specifically and expressly deny any and all liability in connection with any claims which have been made.”

The plaintiff filed the complaint in June 2018, naming a laundry list of defendants from across the Invesco organization, including individual officers and managers. The plan was accused of offering too many investment options—nearly all of them affiliated in some way with Invesco—and of failing to use its leverage as one of the larger employer-sponsored retirement programs in the United States to negotiate for reduced costs for the benefit of plan participants.

The defendants were accused of breaching their Employee Retirement Income Security Act (ERISA) fiduciary duties by offering imprudent affiliated ETF investment products to participants. Further, the lawsuit alleged that the plan offered worse-performing retail shares instead of better-performing institutional shares. The list of allegations went on to suggest the firm added poorly performing proprietary mutual funds to the plan; that it offered imprudent Invesco-branded target-date funds (TDFs) with high expenses and poor performance; and that the plan fiduciaries erred in connection with offering collective investment trusts.

U.S. District Judge Amy Totenberg previously dismissed the claims against Invesco, finding the plaintiff’s allegations were lacking sufficient strength to state plausible claims. However, she also found evidence that the plaintiff’s claims were not futile and granted time to file an amended complaint. It was after this that the parties announced the intent to settle.

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