The IRS has provided guidance on permissible preventive care benefits for HDHPs. These benefits include, for example, periodic health exams (such as annual physicals), routine prenatal and well-child care, immunizations and screening devices and tests (such as cancer screenings).
As a general rule, preventive care generally does not include any service or benefit intended to treat an existing illness, injury or condition. For cost reasons, individuals with chronic conditions may not obtain necessary medical care, leading to consequences that require considerably more extensive medical intervention (for example, amputation, blindness, heart attacks and strokes).
Certain medical care services and items (including prescription drugs) for chronic health conditions now qualify as preventive care for individuals with those conditions, which means they may be covered by an HDHP without a deductible.
On June 27, 2019, President Donald Trump signed an executive order aimed at improving price and quality transparency in health care. The order directs federal agencies to issue guidance in several areas regarding health care costs. Specifically, the executive order directs the Treasury Department and IRS to expand the ability of patients to select HSA-compatible HDHPs that cover low-cost preventive care, before the deductible, that helps maintain health status for individuals with chronic conditions. The IRS issued Notice 2019-45 in response to this executive order.
Expanded Preventive Care for Chronic Conditions
Notice 2019-45 provides that certain medical care services and items, including prescription drugs, for certain chronic conditions should be classified as preventive care under the HDHP rules for individuals with those chronic conditions. These medical services and items are limited to the ones listed below for individuals with the corresponding conditions:
If an individual is diagnosed with more than one chronic condition, all listed services and items applicable to the two or more conditions are preventive care. However, services and items not listed above that are for secondary conditions or complications that occur are not considered preventive care for HDHP purposes. These additional services and items are treated as preventive care only when prescribed to treat an individual with the specified chronic condition, and only when prescribed to prevent the exacerbation of the chronic condition or the development of a secondary condition.
In addition, Notice 2019-45 clarifies that its guidance does not impact the definition of preventive care under the Affordable Care Act (ACA). Under the ACA, non-grandfathered health plans must cover specific preventive care services without any participant cost-sharing.
This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.
Readers should contact legal counsel for legal advice.
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