On July 17, 2019, the IRS, in conjunction with the Treasury Department, issued Notice 2019-45. This notice expands the list of preventive care items and services permitted to be covered by a high deductible health plan (HDHP) before the deductible is satisfied, without jeopardizing the covered person’s ability to make or receive contributions to a health savings account (HSA). This move comes in response to an executive order signed last month aimed at improving price and quality in American healthcare.
The traditional definition of “preventive care” is care that is designed to identify or prevent an illness, injury or medical condition, as opposed to care designed to treat an already existing illness, injury or condition. The new items that have been added to the list do not meet this traditional definition, but rather are used to prevent the worsening of certain chronic conditions or the development of a secondary condition that would require costly treatment.
As the notice states, “cost barriers for care [associated with HDHPs] 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 … that require considerably more extensive medical intervention.”
The notice, which is effective immediately, specifies the following items and services which may be classified as preventive care under an HDHP when used to treat the associated chronic conditions:
|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|
|Insulin and other glucose lowering agents||Diabetes|
|Peak flow meter||Asthma|
|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|
It is important to note that these items may only be classified as preventive care when prescribed to treat an individual with the listed chronic condition and only if prescribed to prevent the exacerbation of the condition or development of a secondary condition.
Additionally, the list is exhaustive. While the IRS and Treasury provided the criteria they used to establish the list, they went on to explain that those criteria may not be used to rationalize covering additional conditions and treatments.
What does all this mean for employers? First, no immediate action is necessary. While these new items are now permitted to be classified as preventive care under an HSA-qualified HDHP there is no requirement that this be done, either now or in the future.
Additionally, unlike those items considered as preventive care for the purposes of the ACA mandate, which must receive first dollar coverage, employers have the option to cover these new preventive care items at 100% or to apply cost-sharing, such as copayments or coinsurance.
As healthcare costs have continued to rise, many employers have found HDHPs to be an effective way of injecting consumerism into their health plans. For those employers who have been reluctant to offer HDHPs in the past because of the lack of access to affordable chronic care treatment (or who have offered them, but their employees have failed to embrace them), this new guidance may present an opportunity to re-think their plan designs and potentially generate increased employee interest in HDHPs.