HSA Health Plan Selection is (Even) More Important — New IRS Guidelines
In response to a recent Executive Order to cover low-cost preventive care for people with chronic health conditions, the IRS expanded the range of treatments and services health insurance companies can now provide as preventive care benefits under HSA-qualified High Deductible Health Plans. However, because the decision of whether and how to include these benefits is left with the individual insurer, health plan selection for those with qualifying conditions during open enrollment may be even more important. These new guidelines could potentially reduce out of pocket costs for families and individuals with common chronic conditions.
Why Now? In the July IRS Notice 2019–45 outlining the change, officials noted “cost barriers for care have resulted in some individuals who are diagnosed with certain chronic conditions failing to seek or utilize effective and necessary care that would prevent exacerbation of the chronic condition.” While the exact cost benefit of preventive care will vary from patient to patient, there is little doubt of the cost effectiveness of early intervention and subsequent treatment compliance in slowing disease progression.
Many of these new preventive care benefits will be familiar, even to non-patients of these qualifying chronic conditions. This expanded list (see adjacent image) includes statins for individuals with heart disease or diabetes, hemoglobin A1c testing for diabetes, low-density Lipoprotein (LDL) testing for heart disease, Selective Serotonin Reuptake Inhibitors (SSRIs) for depression and Angiotensin Converting Enzyme (ACE) inhibitors and Beta-blockers for congestive heart failure, along with many others.
However, while these items many now be classified as preventive services and therefore no longer subject to the specific deductible HSA-qualifying health plans, the notice does not prohibit insurance carriers from applying cost sharing rules, meaning even with the updated guidance these services do not need to be provided free of charge to plan participants. Nonetheless, many carriers are expected to incorporate this additional guidance into program definitions for the 2020 plan year. Offsetting this expansion of benefits, health insurance providers may be expected to pass along these cost increases, though how much is retained by the employer rather than shared with their employee base will vary from employer to employer, as it currently does.
Notably, this updated list of products and services only qualifies as preventive care for individuals who are already diagnosed with the IRS-prescribed associated condition. The thinking is that these services are preventive insofar as treatment slows disease progression or prevents a secondary condition. Despite this qualification, many of the newly included services such as A1c testing and glucose monitoring are increasingly recognized as important markers to those who are not - and may never be - diagnosed with the associated condition. Conversely, the benefit of LDL (cholesterol) testing and statin medications in treating heart disease and diabetes progression, both now covered, is increasingly debated within the scientific community. As with many elements of modern health care, our understanding of human biology and therefore best practices to cost-effectively diagnose and treat will continue to evolve.
Finally, for those who do not qualify under expanded coverage guidance, but may otherwise be interested in measuring, many consumer-focused testing centers offer these tests and more. For instance, Health Testing Centers offers a basic health panel, including cholesterol and A1c, for around $100. With or without first dollar insurance coverage, shopping around for healthcare such as tests, imaging, prescription medication and even doctor consults, is increasingly convenient, and, in the coming years, perhaps even expected.
Aaron Benway, Certified Financial Planner, IRS Enrolled Agent
Aaron is a Certified Financial Planner (CFP) and IRS Enrolled Agent (EA). He co-founded HSA Coach, a digital tool to educate consumers on HSAs, track health expenses and other documents, and provide individual financial calculators, to help consumers get the most from their HSA and other savings. To help individuals directly with financial planning and wealth management he started AB Financial Planning. Prior to co-founding HSA Coach, Aaron was the CFO of ventured backed fintech startup HelloWallet, acquired by Morningstar. Aaron has an MBA from Harvard Business School and an electrical engineering degree from the US Naval Academy.