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IRS Allows Specified Expenses for Chronic Conditions to Be Treated as Preventive Care Under HSA Rules


· 5 minute read


· 5 minute read


IRS Notice 2019-45 (July 17, 2019); IRS News Release IR-2019-129 (July 17, 2019)


News Release

The IRS has issued guidance expanding the preventive care benefits that can be provided by a high-deductible health plan (HDHP) on a no-deductible or low-deductible basis without any adverse effect on HSA eligibility. Under the HSA rules, preventive care generally does not include services or benefits intended to treat existing illnesses, injuries, or conditions. But a June 2019 executive order called for changes to those rules that would allow HDHPs to provide low-cost preventive care to help maintain the health of individuals with chronic conditions (see our Checkpoint article). For cost reasons, those individuals might not obtain care needed to prevent their conditions from worsening, resulting in consequences that require more extensive medical intervention (e.g., heart attacks and strokes).

Under the guidance, specified services and items that are used for certain chronic conditions are considered preventive care for HSA purposes when prescribed for individuals diagnosed with the associated condition to prevent exacerbation of the condition or the development of a secondary condition. (The guidance makes it clear that it does not affect health care reform’s definition of preventive care.) Those services and items, along with the conditions for which they must be prescribed to qualify as preventive care, are listed in an appendix to the guidance. The list includes 14 medical services or items for individuals with 11 specified chronic conditions. The guidance explains the criteria that the IRS used to determine the listed services and items, but cautions that services and items not on the list may not be treated as preventive even if they meet the same criteria. Services or items that treat complications or secondary conditions that occur notwithstanding the preventive care also are not treated as preventive care under the HSA rules. The guidance is effective immediately. The IRS and Treasury Department (in consultation with HHS) will review the list approximately every five to ten years to determine whether any items or services should be removed or added.

EBIA Comment: The guidance addresses an issue that has long concerned employers and service providers. Note that the additional benefits that will qualify as preventive care are limited to the listed items and services when prescribed under the circumstances required in the guidance (e.g., to treat the specified, diagnosed condition). When prescribed under other circumstances, these benefits―like benefits not on the list―remain subject to the general HSA rules regarding preventive care. In some respects, the guidance provides helpful clarification. Many health plans already treat similar expenses for chronic conditions as preventive care for HSA purposes. However, some plans may have used a broader list of benefits or conditions than the IRS guidance. Moreover, pharmacy benefits managers (PBMs) may not inquire as to why a specific drug was prescribed before processing the claim. Thus, the guidance may ultimately contract the scope of expenses being treated as preventive care for some plans, and the lengthy period between reviews means that new treatments and conditions may not be added for quite some time. Some level of transition relief might be a welcome addition for these plans. For more information, see EBIA’s Consumer-Driven Health Care manual at Section X.G (“HSAs: Required HDHP Coverage: Preventive Care”), which will be updated for this development.

Contributing Editors: Thanks to attorney John R. Hickman for his contributions to this article, with final editing by EBIA staff. Mr. Hickman is a partner in the Employee Benefits Practice Group with Alston & Bird in Atlanta,, and is a Contributing Author of EBIA’s Consumer-Driven Health Care, Cafeteria Plans, and Health Care Reform manuals, and a Contributor to EBIA’s HIPAA Portability, Privacy & Security manual.

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