Preventative Care Benefits Expanded for High-Deductible Health Plans (HDHPs)
On Wednesday, July 17, 2019 the Internal Revenue Service (IRS) released Notice 2019-45, which expands the types of medical services that may be treated as preventive care for individuals covered under an HSA-qualified high-deductible health plan (HDHP). A HDHP may not provide benefits for any year until the minimum deductible for that year is satisfied. In this model, the covered individual pays for the cost of medical care and once their deductible is met, the insurance carrier begins to pay claims for services. However, certain services which qualify as “preventative” under Section 223 of the Code are often covered at no expense to the individual. We traditionally think of these cost-free options as annual physicals and age-appropriate screenings as, until this week, preventive care generally did not include any service or benefit intended to treat an existing illness, injury, or condition.
In revisiting ways to expand the use and flexibility of HDHPs and Health Savings Accounts (HSAs) for consumers, the Treasury Department and the IRS, in consultation with the U.S. Department of Health and Human Services, has expanded the list of healthcare items and services which qualify as preventative. As the Notice explains, the Agencies “are aware that the cost barriers for care have resulted in some individuals who are diagnosed with certain chronic conditions failing to seek or utilize effective and necessary care that would prevent exacerbation of the chronic condition.” Not addressing these chronic conditions often leads to consequences which require considerably more extensive medical intervention. Therefore, updates to the list of qualified preventative care benefits for HDHPs will include services received and items purchased for specific chronic conditions, exactly as indicated in the table below:
It is important to keep in mind that this expanded definition is specific to HSA-qualified HDHPs and does not impact the general definition of “preventative care” as required under IRS Code or the Affordable Care Act (ACA).
This Summary is provided to you for general informational purposes only, does not include references to other legal resources (e.g., supporting regulations, formal or informal opinions) unless specifically noted and should not be construed as legal advice or legal opinion on any specific facts or circumstances. Please seek qualified and appropriate counsel for further information and/or advice regarding the application of the topics discussed herein to your employee benefit plans.