Because of the tax-favored treatment of a high-deductible health plan (HDHP) integrated with a health savings account (HSA), individuals are required to pay out-of-pocket for all medical expenses, with the exception of qualified preventive care, until the plan deductible is satisfied. In Notice 2019-45, the IRS expanded the list of allowed preventive services to include medical care and prescription drugs prescribed for specific chronic conditions.
The standard used to expand this list includes three 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.
- There is a strong likelihood, documented by clinical evidence, that with respect to the class of individuals prescribed the item or service, the specific 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.
It’s important to note that the IRS did not require these services be provided without cost sharing. Nor does it suggest the same characteristics could be used to expand the scope of preventive care beyond the defined list.
It remains to be seen how fully insured carriers will respond to the expansion of preventive care. It’s possible fully insured individuals needing these services will continue to pay-out-of-pocket and be reimbursed through available HSA funds. Sponsors of self-insured plans have the latitude to include these services without any or partial cost-sharing.
