Highlights
- The IRS has issued guidance that expands the preventive care items and services that High-Deductible Health Plans (HDHPs) may cover before plan deductibles are met.
- These items include Over-The-Counter (OTC) oral contraceptives, including emergency contraceptives, and male condoms, regardless of whether they are purchased with a prescription. (A proposed rule was released on October 21, 2024, that, if finalized, would also mandate coverage of OTC contraception with no-cost sharing under the Affordable Care Act (ACA), even without a prescription).
- Employers with HDHPs should review their plans’ design and consider whether to cover these OTC items without a deductible.
On Oct. 17, 2024, the IRS issued Notice 2024-75 (the Notice) to expand the list of preventive care benefits permitted to be provided by a HDHP without a deductible (or with a deductible below the minimum deductible) to include:
- Over-The-Counter (OTC) oral contraceptives, including OTC birth control pills and emergency contraceptives, for individuals potentially capable of becoming pregnant, regardless of whether they are purchased with a prescription; and
- Male condoms, regardless of whether they are purchased with a prescription and regardless of the gender of the individual covered by the HDHP who purchases them.
The Notice also clarifies that the following items and services qualify as preventive care for HDHP purposes:
- All types of breast cancer screenings, not just mammograms, for individuals who have not been diagnosed with breast cancer;
- Continuous glucose monitors for individuals diagnosed with diabetes; and
- Selected insulin products, regardless of whether they are prescribed to treat an individual diagnosed with diabetes or prescribed for the purpose of preventing the exacerbation of diabetes or the development of a secondary condition.
HDHPs and Preventive Care
Individuals must be covered by an HDHP (and have no disqualifying health coverage) to be eligible to contribute to a health savings account (HSA). To qualify as an HDHP, a health plan cannot pay benefits—except for preventive care benefits—until the required minimum deductible has been satisfied. For additional information on HDHP and preventive care, see the prior Leavitt Group article on the last expansion of the preventive care HDHP list IRS Notice Expands Permitted Preventive Care – Leavitt Group.
An HDHP may apply a low deductible (or no deductible) to its coverage of preventive care without jeopardizing individuals’ Health Savings Account (HSA) eligibility. Note that the Affordable Care Act (ACA) requires non-grandfathered health plans to cover specific recommended preventive care services on a “first-dollar basis” (that is, without any copayments, deductibles or other cost sharing). Currently, the ACA’s preventive care mandate requires health plans to cover OTC preventive products without cost sharing only when they are prescribed by a health care provider.
Effective Dates
The Notice’s changes for HDHPs have different retroactive effective dates. The IRS’ new guidance for OTC oral contraceptives and male condoms is effective for plan years beginning on or after Dec. 30, 2022. Other previous effective dates include April 12, 2004, for breast cancer screenings; July 17, 2019, for continuous glucose monitors; and plan years beginning after Dec. 31, 2022, for selected insulin products. It is not yet clear as to how a health plan should proceed with a retroactive effective date or whether a HDHP would need to take action on prior deductibles. But it is likely to allow retroactive non-penalty for previous decision-making on covering these types of contraception more than a meaning that would require a health plan to refund any deductibles paid for the contraception. Be sure you are subscribed to the Leavitt Group news alerts for updates.
Source: Zywave. Some content by Leavitt Group. Republished with permission.