Biden Administration Proposes Mandatory Coverage of Over-the-Counter Contraceptives
With the election less than a week away, the Biden Administration released proposed regulations that, if finalized, would mandate non-grandfathered group health plans to cover over-the-counter (“OTC”) contraceptives without cost-sharing and without a prescription. These regulations would encompass daily birth control, emergency contraceptives, and male condoms, among other contraceptive drugs or devices. If finalized, the proposed regulations would become effective for plan years beginning on or after January 1, 2026.
ACA Preventive Care Mandate
As background, the Affordable Care Act’s (“ACA”) preventive care mandate requires non-grandfathered group health plans to cover—without participant cost-sharing—certain preventive items or services that receive an “A” or “B” recommendation by the United States Preventive Services Task Force (“USPSTF”); preventive care and screenings for infants, children, adolescents, and women that are in the guidelines released by the Health Resources and Services Administration (“HRSA”); and certain immunizations recommended by the Advisory Committee on Immunization Practices (“ACIP”).
Changes Proposed by the New Regulations
Currently, the ACA mandates cost-free coverage of OTC contraceptives only when they are prescribed by a healthcare provider. Under the proposal, plans and insurers must cover recommended OTC contraceptive items without a prescription and without cost-sharing, provided that they meet the following criteria: (1) they are available OTC; and (2) the recommendations or guidelines do not necessitate a prescription.
In March, the Food and Drug Administration (“FDA”) approved Opill, which is the first-ever daily oral contraceptive available OTC. As a result, the proposed regulations would require non-grandfathered group health plans to cover Opill without cost-sharing and without a prescription at in-network pharmacies. This is in addition to the requirement to cover other OTC contraceptives, such as daily birth control, emergency contraceptives, and male condoms, without cost-sharing and without a prescription at in-network pharmacies.
The proposed regulations would also amend the ACA’s transparency in coverage (“TiC”) rules, requiring group health plans to notify participants and beneficiaries of the plan’s coverage of OTC contraceptives without cost-sharing and without a prescription. The regulations specifically mention amending the TiC rules by requiring plans and issuers to provide information related to contraceptive coverage and cost-sharing requirements—including a statement explaining the coverage of OTC contraceptive items without cost-sharing—in their TiC internet-based self-service tool or, if requested by the individual, on paper or by telephone.
Recent IRS Guidance on Male Condoms and HDHPs
On October 17, 2024, the IRS issued Notice 2024-75, expanding the list of preventive care benefits that high-deductible health plans (“HDHPs”) are permitted to provide before the plan’s deductible is met. This change allows HDHPs to cover male condoms and OTC oral contraceptives without risking individuals’ eligibility to contribute, or have contributions made on their behalf (e.g., by an employer), on a pre-tax basis to their health savings accounts (“HSAs”). On that same day, the IRS also released Notice 2024-71, which created a safe harbor under section 213 of the Internal Revenue Code for amounts paid for male condoms, treating them as medical care expenses. This guidance is effective for plan years beginning on or after December 30, 2022.
If you have any questions about the proposed regulations or the recent IRS guidance, please contact a member of the Miller Johnson Employee Benefits & Executive Compensation practice group.