The 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) under section 223(c)(2) of the Internal Revenue Code without a deductible, or with a deductible below the applicable minimum deductible (self-only or family) for an HDHP.
On June 24, President Donald Trump issued Executive Order 13877, “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” including, among other things, an order that the Secretary of Treasury, to the extent consistent with law, issue guidance to expand the ability of patients to select HDHPs that can be used alongside a health savings account (HSA), and that cover low-cost preventive care, before the deductible, that helps maintain health status for individuals with chronic conditions.
In prior guidance the Treasury Department and the IRS have stated that preventive care generally does not include any service or benefit intended to treat an existing illness, injury, or condition. However, the agencies say they are aware 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.
The Treasury Department and the IRS, in consultation with the Department of Health and Human Services (HHS), have 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.
The agencies note that each medical service or item, 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; and
- 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 specific medical care services or items are listed in the Appendix attached to Notice 2019-45.