Just a few weeks ago, President Trump issued an Executive Order on June 24, 2019 that “ordered the Secretary of the Treasury, to the extent consistent with law, to issue guidance within 120 days of the date of the order, to expand the ability of patients to select high-deductible health plans that can be used alongside of a health savings account (HSA) and that would cover low-cost preventive care, before the deductible, for medical care that helps maintain health status for individuals with chronic conditions.”
July 17, 2019, the Internal Revenue Service released Notice 2019-45, which for purposes of HSAs, provides a list of medical care expenses that may be treated as preventive care benefits under a high deductible health plan (HDHP). As a result of this Notice, preventive care has now been expanded to include care for certain chronic medical conditions.
Prior to this guidance, individuals that wanted to open and contribute to a Health Savings Account (HSA) could only do so, if they were enrolled in a qualified high deductible health plan (HDHP) and they were not enrolled in any other disqualifying coverage that provided first dollar coverage for medical expenses before the minimum HDHP deductible was satisfied. (For 2019, the minimum deductible is $1,350 for Single coverage and $2,700 for Family coverage. For 2020, the minimum deductible will be $1,400 for Single coverage and $2,800 for Family coverage.)
Exceptions to this disqualifying coverage rule would be first dollar coverage that is restricted to dental, vision or preventive care. Under IRS Code § 223(c)(2)(C), an HDHP is not required to have a deductible or be subject to a minimum annual deductible for preventive care (as defined for purposes of the HDHP/HSA rules).
The Treasury Department and the IRS have consulted with the Department of Health and Human Services, and have determined that “certain medical care services received and items purchased, including prescription drugs, for certain chronic conditions should be classified as preventive care for someone with that chronic condition.” Preventive care in the past generally had not included services or benefits intended to treat an existing illness, injury or condition, however, this change is made in recognition of the cost barriers that exist for individuals with chronic conditions.
Under this notice, Treasury and IRS issued a list of medical services and items that would be classified as preventive care for individuals with a particular chronic condition. The services and items have the following characteristics:
- The service or item is low cost;
- There is medical evidence supporting high cost efficiency of preventing exacerbation of the chronic condition or the development of a secondary condition; and
- There is strong likelihood that this service or use of the item will prevent the exacerbation of the chronic condition or the development of a secondary condition that requires significantly higher cost treatments.
Notice 2019-45 provides that the following services and items for individuals with the specified chronic conditions listed are treated as preventive care. These medical services and items are limited to the specific medical care services or items listed for the associated chronic conditions specified in Notice 2019-45. Any medical care previously recognized as preventive care for these rules is still treated as preventive care. Further, this notice does not affect the definition of preventive care provided in §54.9815-2713.
- Inhaled corticosteroids, peak flow meter
Congestive heart failure, diabetes and/or coronary artery disease
- Angiotensin Converting Enzyme (ACE) inhibitors
Congestive heart failure and/or coronary artery disease
- Selective Serotonin Reuptake Inhibitors (SSRIs)
- Insulin and other glucose lowering agents, Retinopathy screening, Glucometer, Hemoglobin A1c testing
- Low-density Lipoprotein (LDL) testing
Heart disease and/or diabetes
Liver disease and/or bleeding disorders
- International Normalized Ratio (INR) testing
Osteoporosis and/or osteopenia
Important note: Although the notice clarifies that benefits for the specified services and items for individuals with the specified chronic conditions listed in the Appendix are preventive care for purposes of IRS Code § 223(c)(2)(C), it does not treat these services and items as preventive care required to be provided without cost sharing for purposes of section 2713 of the PHS Act. The effect of this Notice 2019-45 is that health plans will likely make additional preventive care coverage for the specified chronic conditions available at no- or low- cost for those covered by a HDHP that is designed to be paired with an HSA. It will be interesting to see how the health insurance industry will respond as this could significantly impact the out of pocket expenses for individual with the chronic medical conditions included in the notice.