Thursday, July 18, 2019

Treasury Defines Unusual Category of Quasi-Preventive Service for High Deductible Plans

We've had high deductible plans for years now, and in order to have a large health savings account (shielding as much as $8000 per year from your taxes), the IRS enforces some firm rules on the plan.

Specifically, the plan MUST require a high deductible, meaning the plan is handcuffed and CAN'T pay for services before the deductible is met.  (With exceptions for limited types of preventive care, like mammograms, which have no copay or deductible).

The Trump Administration just issued a new I.R.S. advisory which creates a new category of what I have to call "quasi preventive" services, which include statins, insulin, and SSRI drugs.   The new ruling allows a high-deductible plan to pay for this limited palette of services, from day 1 each year, without applying a deductible or copay to them.   This is at the option of the plan; it becomes a point of flexibility in plan design.

The fixed palette of new "quasi preventive" (meaning no copay, no deductible) services are shown in the following table.   Treasury says it hopes to update the list every 5-10 years to ensure stability of the category.

click to enlarge

Source Materials
  • New IRS Policy 2019-45, here.
  • Trade press at Health Leaders, here.   Dive Healthcare here.  MedCity here.
  • Trade press at Forbes, here.  American Hospital Association here.
  • Treasury press release here.
  • IRS press release here.
  • Sens. Thune, Carper (R-SD, D-Del) thank administration, here.

Policy 2019-45 contains a detailed review of previous and parallel policy and how the new one fits in.


It's a little confusing to call these Preventive Benefits.  The point is to create plan design flexibility to allow the high deductible plan to pay for statins or insulin from day 1, if it wants to, rather than being handcuffed to putting these medical services into debiting the patient's HSA.  And what are the things a plan can pay, in fact, has to pay, from day 1: preventive benefits, like mammography.

The concept of preventive benefits has always had some gray areas.  Mammography or a pap smear in a person with no signs and symptoms is clearly preventive.   On the other hand, smoking cessation therapy has been classified as preventive, I guess preventing emphysema and lung cancer, but it could also be therapy, e.g. treatment of nicotine addiction.  No one has argued that dialysis is preventive, but if you have ESRD, it's preventive of going into a coma and dying.  After a car accident, a tourniquet is preventive of bleeding to death...  But I've also used the example that insulin injections may prevent a diabetic from going into a seizure or coma, but insulin medication "isn't preventive."  Here, per the IRS, insulin is on a list of elective preventive services.   It will be a little bit confusing but the IRS medical services above are a special set of services specific only to the world of HSA debit decisions.  Don't look for treatments like statins or insulin to show up on a USPSTF list of "preventive" services rather than treatments.

IRS says the list will be for services that are low cost, likely to prevent exacerbation of a condition, and highly cost-efficient.


Update.  If you found this topic interesting, you might enjoy a July 2019 Health Affairs Blog about updates to IRS policy for FSA/HSA, here.