On July 17, 2019, the Internal Revenue Service (the “IRS”) released Notice 2019-45 which expands the list of permissible preventive care benefits for high deductible health plan (“HDHP”) purposes. Among other requirements, an individual must be covered by a HDHP in order to establish a Health Savings Account (“HSA”).
A HDHP is a health plan with certain minimum deductible and maximum out-of-pocket expense requirements. Under a HDHP, the plan typically does not provide any benefits until the minimum deductible for the year is satisfied. However, certain preventive care is excluded from the deductible requirements or may be subject to a lower deductible.
Notice 2019-45 is the most recent of a series of guidance which identifies and expands the preventive care services and medications that may be provided through a HDHP with no or a reduced deductible/co-payment. See Notice 2004-23, Notice 2004-50, and Notice 2013-57.
The preventive care guidance began with Notice 2004-23, in which the IRS announced a preventive care safe harbor for HDHPs. Under this safe harbor, preventive care includes: (1) periodic health evaluations, including tests and diagnostic procedures ordered in connection with routine examinations; (2) routine prenatal and well-child care; (3) child and adult immunizations; (4) tobacco cessation programs; and (5) obesity weight-loss programs.
Further, the Notice 2004-23 preventive care safe harbor includes screening for a broad range of illnesses and conditions (e.g., cancer, heart, and vascular disease, infectious diseases, mental health conditions, substance abuse, metabolic and nutritional conditions, obstetric and gynecologic conditions, vision and hearing disorders, etc.). Significantly, Notice 2004-23 indicated that “preventive care does not generally include any service or benefit intended to treat an existing illness, injury or condition.”
Next, in Notice 2004-50, the IRS provided additional guidance that expanded the services and medications which constitute preventive care for HDHP purposes. First, in Q&A 26 of Notice 2004-50, the IRS indicated that preventative care included “any treatment that is incidental or ancillary to a preventative care service or screening as described in Notice 2004-23.” Q&A 26 of Notice 2004-50 cites the removal of polyps during a diagnostic colonoscopy as an example of incidental or ancillary preventative care service.
Second, in Q&A 27 of Notice 2004-50, the IRS indicated that “drugs and medications are preventive care when taken by a person who has developed risk factors for a disease that has not yet manifested itself or not yet become clinically apparent (i.e., asymptomatic) or to prevent the reoccurrence of a disease from which a person has recovered…” This Notice cites “the treatment of high cholesterol with cholesterol-lowering medications (e.g., statins) to prevent heart disease or the treatment of recovered heart attack or stroke victims with Angiotensin-converting Enzyme (ACE) inhibitors to prevent a reoccurrence” as examples of such preventative care medications.
Significantly, Q&A 27 of Notice 2004-50 reiterated certain language from Notice 2004-23 by stating that preventive care “does not include any service or benefit intended to treat an existing illness, injury or condition, including drugs or medications used to treat an existing illness, injury or condition”.
Next, the IRS released Notice 2013-57 which provides that for HDP purposes, in addition to preventive services described in Notices 2004-23 and Notice 2004-50, “any preventive services under section 2713 of the PHS Act will also be treated as preventive care…” Generally, Section 2713 of the Public Health Service Act (the “PHS”), as added by the Affordable Care Act (the “ACA”), requires group health plans and health insurance issuers offering group and individual health insurance coverage to provide certain preventative health service without imposing cost sharing requirements (i.e., co-payments, deductibles, etc.).
On July 10, 2010, the IRS, the Department of Health and Human Services (“HHS”), and the Department of Labor (the “DOL”) jointly issued regulations on the preventive care that must be provided by group health plan and health insurance issuers offering group health insurance without any cost-sharing requirements. See 26 CFR 54.9815-2713T, 29 CFR 2590.715-2713, 45 CFR 147.130. Unfortunately, a summary of the preventive care regulations is outside the scope of this article.
A limited comparison of the definitions of preventive care under the HDHP guidance versus the PHS 2713 regulations suggests that preventive care under both regimes is substantially similar. As a practical matter, with the release of Notice 2013-57, the permissible preventive care benefits under a HDHP would always be equal to or exceed the permissible preventive care benefits under an ACA group health plan or ACA group health policy.
The most recent guidance (Notice 2019-45) continues the above-described potential favoring of HDHPs over ACA group health plans and ACA health insurance. Notice 2019-45 expands the definition of preventive care to include “certain medical care services received and items purchased, including prescription drugs, for certain chronic conditions” that are listed in Appendix A to the Notice.
The following chronic conditions are listed in Appendix A to Notice 2019-45: asthma, congestive heart failure and/or coronary artery disease, depression, diabetes, heart disease, hypertension, liver disease and bleeding disorders and osteoporosis and/or osteopenia. Appendix A lists the types of services, medications and medical equipment that qualify for preventive care under the Notice. For example, the following services, medications and/or medical equipment qualifies as preventive care for diabetes: (1) angiotensin converting enzyme (ACE) inhibitors, insulin, and other glucose lowering agents, retinopathy screening, glucometer, hemoglobin AC1 testing, and statins.
The expansion of preventive care pursuant to Notice 2019-45 encroaches on the limitations on the treatment of an existing illness, injury or conditions (contained in Notices 2004-23 and 2004-50, discussed above). In addition, Notice 2019-45 states that the Notice does not affect the definition of preventive care provided in Regulation Section 54.9815-2713 (the IRS regulations on preventive health services, referenced above). As such, with the release of Notice 2019-45, the permissible preventive care benefits under HDHPs will be more favorable than the permissible preventive care benefits under ACA group health plans and ACA health insurance. Hopefully, the IRS, HHS, and the DOL will take steps to adopt a similar expansion of preventive care (without cost sharing requirements) to ACA group health plans and ACA health insurance.