IRS Expands Preventive Care Benefits for HDHPs

On October 17, 2024, the Internal Revenue Service (IRS) issued Notice 2024-75 to expand preventive care benefits permitted by a high deductible health plan (HDHP) under section 223(c)(2)(C) of the Internal Revenue Code. The guidance states that over-the-counter (OTC) contraceptives and male condoms, types of breast cancer screenings beyond mammography, and certain types of diabetes care all qualify as preventive care. 

Section 223 of the Code permits eligible individuals to establish tax-favored Health Savings Accounts (HSAs). Among the requirements to qualify as an eligible individual under section 223(c)(1) is that the individual be covered under an HDHP and have no disqualifying health coverage. As defined in section 223(c)(2), an HDHP is a health plan that satisfies certain requirements, including requirements with respect to minimum deductibles and maximum out-of-pocket expenses.

Generally, under section 223(c)(2)(A), an HDHP is not permitted to provide benefits for any year until the minimum deductible for that year is satisfied. However, section 223(c)(2)(C) provides a safe harbor for the absence of a deductible for preventive care. Under section 223(c)(2)(C), "[a] plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for preventive care (within the meaning of section 1861 of the Social Security Act [SSA], except as otherwise provided by the Secretary)." Therefore, an HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible otherwise required by section 223(c)(2)(A). To be a preventive care benefit as defined for purposes of section 223, the benefit must either be described as preventive care for purposes of section 1861 of the SSA or be determined to be preventive care in guidance issued by the Department of the Treasury (Treasury) and the IRS.

Under Notice 2024-75, a plan will not fail to qualify under section 223(c)(2) if it provides benefits for OTC birth control with or without a prescription, including emergency contraceptives and male condoms. The guidance also expands the coverage of breast cancer screenings initially set out in Notice 2004-23 to include other options like ultrasounds and MRIs. Finally, the guidance makes clear that benefits for continuous glucose monitors for diabetes patients and selected insulin products described in section 223(c)(2)(G) of the Code are treated as preventive care. The safe harbor for certain insulin products "applies without regard to whether the insulin product is prescribed to treat an individual diagnosed with diabetes or prescribed for the purpose of preventing the exacerbation of diabetes or the development of a secondary condition," the IRS explains.  

Notice 2024-75 is generally effective for plan years that begin on or after December 30, 2022.

In related concurrent guidance, the IRS issued Notice 2024-71, which provides a safe harbor for amounts paid for condoms by use by the taxpayer, spouse, or dependent under section 213(d) of the Code.

Tri-Agencies Issue FAQs Addressing Preventative Services and Breast Reconstruction 

The U.S. Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments), issued FAQs About Affordable Care Act and Women's Health and Cancer Rights Act Implementation Part 68 on October 21, 2024. This guidance addresses health plans and issuers coverage obligations under the Affordable Care Act (ACA) preventive services mandate for Pre-Exposure Prophylaxis (PrEP) and for breast reconstruction under the Women's Health and Cancer Rights Act (WHCRA).

According to the FAQs, plans and issuers must cover, without cost sharing, specified oral and injectable formulations of PrEP, as well as specified baseline and monitoring services, consistent with the 2023 recommendation of the U.S. Preventive Services Task Force (PSTF), for plan years (in the individual market, policy years) beginning on or after one year from the issue date of the recommendation (in this case, plan or policy years beginning on or after August 31, 2024). According to the Departments, the PSTF updated its recommendation in 2023 to now include three FDA-approved formulations of PrEP and to clarify to whom the recommendations for PrEP apply. The FAQs also discuss when plans and issuers may and may not use medical management techniques with respect to individuals prescribed PrEP.

In addition, the guidance explains that if a plan or issuer is subject to the WHCRA and provides medical and surgical benefits with respect to a mastectomy, the plan or issuer is required to provide coverage for chest wall reconstruction with aesthetic flat closure, if elected by the patient in consultation with the attending physician in connection with a mastectomy, as a required type of reconstruction.

The FAQs also contain a host of information related to medical coding for preventative items and services and guidance to plans and issuers about coverage decision-making when they have information indicating that certain items and services are not, in fact, recommended preventive items and services for a particular participant, beneficiary, or enrollee.

Miller & Chevalier's ERISA Litigation and Employee Benefits Practice Welcomes (Back) Elizabeth Jonas

We are very pleased to announce that Elizabeth Jonas has rejoined our ERISA Litigation and Employee Benefits practice as Counsel. Elizabeth joins from a global firm where she litigated complex commercial disputes in state and federal courts on both the trial and appellate level. Elizabeth previously developed her experience in ERISA, the Federal Employee Health Benefits Act (FEHBA), and related regulatory issues including federal preemption of state laws, the intersection of ERISA and the ACA, and the law affecting pharmacy benefit managers and third-party administrators of health plans as a Senior Associate at Miller & Chevalier. Elizabeth was recognized in the 2021 edition of Legal 500 as a rising star in ERISA litigation. 

Upcoming Speaking Engagements and Events

Joanne will speak at In-House Benefits Counsel Network 8th National Forum on October 29 and the American Bar Association 18th Annual Labor and Employment Law Conference on November 16.

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