The IRS announced transition relief that applies to Massachusetts, Illinois and other states that require health plans to cover male sterilization at no cost to the individual as a "preventive care" expense. This notice is important for two reasons:
- It clarifies that male sterilization is not a preventive care expense according to the federal definition, and therefore plans that cover it at no cost to the employee are not HSA eligible.
- Thankfully, the IRS has provided transition relief through the end of 2019 for plans - and states - to make appropriate changes to their plans (and laws) to bring them back into compliance with the HSA rules.
Self-funded groups will simply be able to make this change to their plan design, but fully-insured groups are going to have to wait for state laws to change if they currently require male sterilization to be covered at no charge. If state laws don't change, barring additional relief from the IRS, those plans will cease to be HSA-qualified 1/1/2020.