IRS expands allowable preventive care without cost-sharing (by Patricia Toro, MD MPH)

November 6, 2024

Summary: Employers can cover additional breast diagnostic tests as preventive and waive cost sharing even with tax advantaged Health Savings Accounts.

The Affordable Care Act requires coverage with no cost sharing for certain types of preventive care such as evidence-based cancer screening tests. However, members often complain when they face cost sharing for follow up tests after a positive screening test. Employers increasingly ask if they can expand their benefits that are considered ‘preventive’ to offer more services without cost sharing.

Employers want to be careful not to undermine the tax advantages of their Health Savings Accounts (HSA), which require that a high deductible health plan (HDHP) charge cost sharing for non-preventive care until the deductible is fulfilled. Now, the answer to these questions has become clearer, as the IRS expanded preventive care coverage for HSA eligibility and the taxable status of male condoms

In the last 2 weeks, the Internal Revenue Service (IRS) published new guidance (Notice 2024-75) that expands what is considered preventive for individuals with an HSA-qualified HDHP, as well as expanded the definition of a qualified medical expense to include male condoms (Notice 2024-71).

Implications for employers:

Employers with HSA-qualified HDHPs may now cover these additional preventive services related to:

●      OTC oral contraceptives (including emergency contraception),

●      male condoms,

●      breast cancer screenings other than mammograms,

●      continuous glucose monitors, and

●      certain insulin products.

These preventive care benefits are not required to be covered on a first dollar basis (without any cost sharing) under the ACA’s preventive services mandate, although another proposed Biden Administration rule if finalized in 2025 would require coverage of OTC contraceptives without cost sharing in 2026.

These changes are all effective now, but their retroactive effective dates vary, based on the type of benefit.

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Illustration by Dall-E

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