IRS has issued Notice 2019-45 which expands the list of “preventive care benefits” permitted to be provided by a high deductible health plan (“HDHP”) when determining if an individual is eligible to make tax-exempt contributions to a health savings account (“HSA”).
In general, an individual is eligible to contribute (or have his or her employer contribute) to an HSA if he or she participates in an HDHP that meets certain statutory and regulatory requirements. In most cases, a qualified HDHP may not pay benefits until its deductible has been satisfied. However, in one exception to the general rule, expenses for “preventive care” may be paid before the deductible has been reached.
“Preventive care” has been defined, in general terms, as care designed to identify or prevent illness, injury, or a medical condition, as opposed to care designed to treat an existing illness, injury, or condition.
However, in Notice 2019-45, the IRS stated 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. Failure to address these chronic conditions has been demonstrated to lead to consequences, such as amputation, blindness, heart attacks, and strokes that require considerably more extensive medical intervention.”
Therefore, IRS has determined that certain medical care services received and items purchased, including prescription drugs, for certain chronic conditions should be classified as preventive care for someone with that chronic condition and has created the following list of services and items that can be included in the definition of “preventive care”:
- Angiotensin Converting Enzyme (ACE) inhibitors;
- Anti-resorptive therapy;
- Beta Blockers;
- Blood pressure monitors;
- Inhaled corticosteroids;
- Insulin and other glucose lowering agents;
- Retinopathy screening;
- Peak flow meter;
- Hemoglobin A1c testing;
- International Normalized Ratio (INR) testing;
- Low-density Lipoprotein (LDL) testing;
- Selective Serotonin Reuptake Inhibitors (SSRIs); and
The IRS noted that each of these medical services or items, when prescribed for an individual with the related chronic condition, evidences the following characteristics:
- The service or item is low-cost.
- There is medical evidence supporting high cost efficiency (a large expected impact) 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.
The IRS has warned, however, that while it may periodically review the list, services or items that meet (or may meet) these criteria but are not on the current list are not treated as preventive care as a result of Notice 2019-45.
Notice 2019-45 can be found by clicking here.