A recently released IRS Notice immediately expands the list of preventive care benefits permitted to be provided by a high deductible health plan (HDHP) for some chronic conditions without a deductible, or with a deductible below the applicable minimum for an HDHP. Generally, an HDHP can pay for benefits only after the deductible has been reached. This means that, except for specifically-defined preventive care benefits, individuals must absorb all first dollar medical costs before the HDHP coverage can begin. It has long been argued that this requirement unfairly impacts individuals with certain chronic ailments. This preventive care benefit expansion addresses that concern and is in response to President Trump’s executive order directing the IRS to consider ways to expand the use and flexibility of health saving accounts (HSAs) and HDHPs.
In prior guidance, the IRS has not included preventive care for services or benefits intended to treat an existing illness, injury, or condition. This new policy will allow insurance providers/plans to offer enhanced preventive care before facing any deductible costs to help patients better manage their chronic conditions and avoid serious complications. The following have been newly classified as preventive care for the chronic conditions indicated:
Note that only those items listed can be covered first-dollar, and they can only be covered first-dollar if the covered person has the condition listed. Also note that a plan is not required to cover these above listed items on a first-dollar basis, as the IRS has confirmed that these items are not required preventive care services that plans must cover under the Affordable Care Act (ACA). A plan may choose to cover all, some, or none of these new preventive care items listed above before the plan’s deductible is reached for employees or dependents with the specified conditions.
HDHP sponsors should review the new guidance promptly. Some HDHP sponsors may seek to expand the list of preventive care items and services covered under the HDHP. If so, the employer must work with its insurer (for insured plans) or third party provider (for self-funded plans) to update the plan document and administrative process, and the employer must update any summary plan descriptions to include these new services. Employers also will likely require an updated summary of benefits and coverage (SBC). Self-funded plan sponsors should consider if covering one or more of these new preventive services could improve overall medical trend factors. As a result of these considerations, employers considering the expansion may reasonably prefer waiting to implement any changes until the next plan year/renewal, rather than implement a mid-year change.
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