There have been numerous announcements and changes in the health care market recently, impacting not only workers in that industry, but employee benefits in nearly every other sector as well. Just a few of the recent changes include an executive order from the current administration to support healthcare cost transparency, as well as an announcement from the IRS about modest increases to HSA limits in 2020.
In mid-June, the IRS made yet another announcement, this time in relation to coverage for chronic conditions under high deductible health plans (HDHPs). According to a public release, the IRS and other governing bodies have determined that certain medical services related to preventative care for chronic conditions will now be covered as part of HDHP coverage.
Preventative care deductibles
This determination from the IRS, Treasury Department and Department of Health and Human Services shakes up the previously applied rules for HDHP coverage. As the IRS explained in the release, HDHP benefits are not applicable until a minimum deductible for the year is met. However, this deductible did not include preventative care.
In essence, the IRS and Treasury Department has expanded the list of preventative care benefits that can be supported by an HDHP. In this way, coverage benefits can be applied without a deductible, or in cases when the minimum deductible requirement is not yet met.
"The Treasury Department and the IRS, in consultation with HHS, have determined that certain medical care services received and items purchased, including prescription drugs for certain chronic conditions should be classified as preventative care for someone with that chronic condition," officials explained in Notice 2019-45.
What diagnoses and preventative care types are covered?
This expansion will impact those with HDHPs who have also been diagnosed with certain conditions, and provides preventative care for the following conditions:
- Individuals with asthma can now receive inhaled corticosteroids and/or peak flow meters as part of covered, preventative care.
- Those diagnosed with diabetes can use their HDHP coverage for insulin and other glucose lowering agents, retinopathy screenings, glucometers, and/or hemoglobin A1c testing.
- Expanded coverage also includes low-density Lipoprotein (LDL) testing and/or statins for individuals with heart disease.
- Those with liver disease and/or bleeding disorders can receive coverage for international normalized ratio (INR) testing.
Expanded HDHP coverage also extends to certain preventative care services for congestive heart failure, coronary artery disease, osteoperosis and/or osteopenia, hypertension and depression. A full list of the expanded preventive care and the qualifying chronic conditions can be found in the appendix of Notice 2019-45.
The reason for the decision: Aligning with the recent executive order
This expanded HDHP coverage comes directly on the heels of President Trump's executive order, "Improving Price and Quality Transparency in American Healthcare to Put Patients First." The order directs the Treasury Department and IRS to consider expanding the flexible use of HDHPs as well as HSAs. While prior guidance from the Treasury Department and IRS stated that preventive care does not encompass services for existing illnesses or conditions, this order is meant to improve support for those individuals.
"[T]he Treasury Department and the IRS 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," the notice stated.
Through expanding coverage for services related to chronic conditions, individuals can get the medical assistance and preventive care they need in a more flexible and cost-effective way. This may encourage those with chronic illnesses to seek out care and prevent their condition from worsening.
