Introduction

Earlier today, the IRS updated their rules regarding what types of prescriptions can be paid for via a copay or other type of cost sharing before meeting the HSA’s minimum deductible. This ruling is a result of the Presidential Executive Order issued in June directing the governing agencies (IRS, DOL, and HHS) to seek a solution within the law that would encourage the use of more preventive care prescriptions.

What Do You Need to Know?

If you sponsor an HSA-compatible high-deductible health plan, that plan can now cover the following classes of prescriptions via a copay or other cost-sharing plan without jeopardizing the employee’s HSA eligibility. Note that these classes of drugs must be prescribed either to prevent a specific disease from manifesting or prescribed to treat a chronic condition and effectively prevent its worsening.

What Do You Need to Do?

While this change is effective as of the date of notification (July 17, 2019), plans will need to be evaluated to determine if changes are needed to reflect this new standard. Fully insured plan sponsors will need to communicate with their insurance carriers to determine how the carrier will process claims for these medicines, and what controls will be in place to assure that copays or other cost sharing is only applied in the appropriate circumstances. Self-funded plan sponsors will need to consult with their TPAs and other affected parties for the same reasons.

Additionally, should you choose to change your plans to adopt these new standards, a communication will need to be distributed to employees to reflect the changes, including a new Summary of Benefits and Coverage, which will need to be distributed no less than 60 days prior to the date of the change of the plan if the change occurs before your next plan renewal.

Need More Help?

For more information on this notice and how it may affect your plan offering, please reach out to your Assurance representative. We’re here to help!

Helpful Links

Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances.