Wyatt Employment Law Report

High Deductible Health Plan – Helpful Guidance from the IRS

By Sherry Porter

Many employers sponsor high deductible health plans (HDHP) coupled with a health savings account (HSA) to provide group health insurance for their eligible employees.  In order to utilize an HSA, the individual must have coverage under a HDHP and have no disqualifying health coverage.  One issue that has arisen relates to the requirement that the HDHP generally cannot provide for any medical expense (except for preventive care) until the participant satisfies the minimum deductible for that year.  If the HDHP provided health care benefits for anything except preventive care prior to the individual meeting the deductible, then the individual is disqualified from having an HSA. This has created some interesting issues for participants with existing illnesses or chronic conditions.  The IRS has recently provided guidance that most employers (and participants) will find helpful.

Under IRS Notice 2019-45, the IRS has expanded the definition of preventive care effective July 17, 2019.  Under prior guidance, preventive care generally does not include services or benefits to treat an existing illness, injury or condition.  Preventive care includes annual physicals, routine checkups, immunizations, weight loss programs, smoking cessation programs and certain screenings. While these are still considered preventive care under the new guidance, the definition of preventive care has been expanded to include medical services and items for individuals with a chronic condition that can prevent the exacerbation of that condition.  The goal is to allow coverage of these services/items to reduce the costs associated with chronic illnesses overall.  The Notice provides a list of what can now be considered preventive care for individuals diagnosed with certain conditions (see chart below). This expansion may push more employees with chronic conditions into a HDHP.  Plan sponsors will want to review their plan documents to determine if they should be amended to address this expanded definition of preventive care.

Preventive Care for Specified Conditions For Individuals Diagnosed with
Angiotensin Converting Enzyme (ACE) inhibitors Congestive heart failure, diabetes, and/or

coronary artery disease

Anti-resorptive therapy Osteoporosis and/or osteopenia
Beta-blockers Congestive heart failure and/or coronary artery

disease

Blood pressure monitor Hypertension
Inhaled corticosteroids Asthma
Insulin and other glucose lowering agents Diabetes
Retinopathy screening Diabetes
Peak flow meter Asthma
Glucometer Diabetes
Hemoglobin A1c testing Diabetes
International Normalized Ratio (INR) testing Liver disease and/or bleeding disorders
Low-density Lipoprotein (LDL) testing Heart disease
Selective Serotonin Reuptake Inhibitors (SSRIs) Depression
Statins Heart disease and/or diabetes

 

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