Expanded Preventive Care for Chronic Conditions Covered Under HDHPs and HSAs

The Treasury Department and IRS have been directed to consider ways to expand the use and flexibility of HSAs and High Deductible Health Plans (HDHPs) consistent with the provisions of section 223 and the appropriate standard for preventive care under section 223(c)(2)(C).

Specifically, on June 24, 2019, President Trump issued an Executive Order to improve 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 an HSA, and that cover low-cost preventative care, before the deductible, that helps maintain health status for individuals with chronic conditions.

The Treasury and the IRS, in consultation with HHS, have determined, via Notice 2019-45, that certain medical care services received and items purchased, including prescription drugs, for chronic conditions should be classified as preventive care for someone with that chronic condition. These medical care services and items are limited to the specific medical care services or items below:

The Treasury Department and the IRS noted 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
  • There is a strong likelihood, documented by clinical evidence, that with respect to the class of individuals prescribed the item or service, the specific services or use of the item will prevent the exacerbation of that chronic condition or the development of a secondary condition that requires significantly higher cost treatments

Services or items that meet (or may meet) the criteria but are not on the above list are not treated as preventive care as a result of this notice or on any other basis.

If an individual is diagnosed with more than one chronic condition, all listed services and items applicable to the two or more conditions are preventive care.

The Treasury Department and the IRS, in consultation with HHS, will periodically review the list of items to determine whether additional services or items should be added or removed from the list. The periodic review is expected to occur approximately every five to ten years to promote stability and to avoid confusion by participants in, or sponsors or providers of, HDHP arrangements.

Sign up for our newsletter

Related content

See all insights

CAA 2021 Provisions Require Employers Take a Closer Look at Employee Benefits Costs

HRAs + HSAs = Better Together?

Common Myths about HRAs, Busted

Q&A with CGO Melanie Hallenbeck: 100 days with Alegeus

To Card or Not to Card? Advantages and disadvantages of a carded HRA

The ABCs of HRAs: A guide to health reimbursement arrangements

The Impacts of Employer Contributions to HSAs

Case Study: COBRA Administration Made Easy

The Future of HR in Organizational Success

Navigating Unexpected Dental Expenses with an HSA

HRAs as a Stepping Stone to Consumerism

Webinar FAQs: Lifestyle Spending Accounts (LSAs)