Publication

23 July 2019

IRS Alleviates Chronic Conditions for HDHPs (and Hopefully Participants Too)!

Highlights

Effective as of July 17, 2019, the IRS expanded the list of preventive care benefits permitted to be covered by a qualified high deductible health plan (“HDHP”) before the minimum deductible is satisfied. IRS Notice 2019-45 lists fourteen different types of preventive care items and services now permitted to be covered by a HDHP below the minimum deductible, but only for specified chronic conditions.

The good news is that if your specific condition is on the list and your HDHP elects to provide coverage before the deductible, the deductible is no longer a major obstacle for you to receive the necessary care. If your specific condition is not on the list, you still need to wrestle with the cost of health care until you satisfy your HDHP’s deductible.

Background

On June 24, 2019, President Trump issued Executive Order 13877, which ordered the Secretary of Treasury to issue guidance expanding the ability of patients to seek low-cost preventive care. In response to the Executive Order, the Treasury and the IRS issued Notice 2019-45.

Previous guidance from the IRS clarified that preventive care that may be covered by a HDHP before the deductible is satisfied generally does not include any benefit intended to treat an existing illness, injury, or condition. In other words, preventive care included treatment of chronic conditions, but only before an individual was diagnosed with the chronic condition (i.e., the individual was “at-risk” of being diagnosed with the chronic condition). Once an individual was diagnosed with a chronic condition, any treatment for that condition was no longer preventive care. For example, treatment for pre-hypertension was considered preventive care, whereas treatment for hypertension was not.

Preventive Care and Chronic Conditions

Coverage under a HDHP is a necessary element of HSA eligibility, but HDHPs may only provide coverage for items or services that constitute preventive care before the minimum deductible is satisfied.

The goal of Notice 2019-45 is to assist individuals who are diagnosed with certain chronic conditions obtain the necessary care before the HDHP deductible is satisfied to prevent the worsening of the chronic condition.

Below is the list of permissible preventive care for the specified conditions.

Preventive Care for Specified Conditions

For Individuals Diagnosed With

Angiotensin Converting Enzyme (ACE) inhibitors Congestive heart failure, diabetes, and/or coronary artery disease
Anti-resorptive therapy Osteoporosis and/or osteopenia
Beta-blockers Congestive heart failure and/or coronary artery disease
Blood pressure monitor Hypertension
Inhaled corticosteroids Asthma
Insulin and other glucose lowering agents Diabetes
Retinopathy screening Diabetes
Peak flow meter Asthma
Glucometer Diabetes
Hemoglobin A1c testing Diabetes
International Normalized Ratio (INR) testing Liver disease and/or bleeding disorders
Low-density Lipoprotein (LDL) testing Heart disease
Selective Serotonin Reuptake Inhibitors (SSRIs) Depression
Statins Heart disease and/or diabetes

 

The Treasury Department and the IRS, in consultation with the Department of Health and Human Services, will periodically review the list of preventive care services and provide updates as appropriate.

Good News

This is likely good news to insurers, third party administrators (“TPAs”), and pharmacy benefit managers (“PBMs”), in addition to individuals covered by HDHPs. This is because insurers, TPAs, and PBMs, in effort to make HDHPs more attractive, have been increasingly aggressive in covering treatment for chronic conditions as preventive care before the HDHP deductible is satisfied, often running afoul of the IRS’s previous guidance.

Next Steps

This expansion is effective immediately. We suspect that insurers, TPAs, and PBMs will quickly update their preventive care guidelines for HDHPs. Those updates should be seamless to the HDHP sponsor. But, if you have any questions regarding Notice 2019-45, preventive care requirements, or HDHPs in general, please contact the authors (or any member of the Miller Johnson Employee Benefits Practice Group).