In a move toward enhancing healthcare accessibility, the IRS has released Notice 2024-75, expanding the list of preventative care coverage allowed under high deductible health plans (HDHPs). This update allows certain preventative care services and products to be provided without a deductible or with a deductible below the minimum required for HDHPs. This change aims to support individuals in managing their health more proactively, aligning with the ongoing efforts to improve preventive healthcare measures.
For HR directors, plan sponsors, claims administrators, and benefit managers navigating the complexities of healthcare benefits, this notice brings a range of changes and clarifications. In this guide, we’ll explore what these changes mean, how they impact various benefits, and the steps you can take to optimize these benefits for your employees.
Table of Contents
- Expanded Preventative Care Coverage Details
- Impact on LPFSA and LPHRAs
- Impact on Limited Healthcare FSAs
- Conclusion
- FAQs
Expanded Preventative Care Coverage
Notice 2024-75 emphasizes enhancing preventive care accessibility through HDHPs. Here’s a quick rundown of the newly covered items:
- Over-the-counter (OTC) oral contraceptives such as birth control pills and emergency contraceptives are now considered preventative care, even without a prescription. This change ensures individuals have easier access to necessary reproductive health products. This guidance is effective for plan years (in the individual market, policy years) that begin on or after December 30, 2022.
- Male condoms are now included as preventative care items, regardless of the purchaser’s gender or whether a prescription is needed. This inclusion acknowledges the importance of protection and safe sex practices. This guidance is effective for plan years (in the individual market, policy years) that begin on or after December 30, 2022.
- Breast cancer screenings include mammograms, magnetic resonance imaging (MRIs), ultrasounds, and similar breast cancer screening services are now included as preventative care for individuals who haven’t been diagnosed with breast cancer. This extends screenings beyond mammograms allowing for early detection and effective prevention strategies. This language change is effective as of the date of publication of Notice 2004-23 (April 12, 2004).
- Continuous glucose monitors (CGMs) for individuals diagnosed with diabetes are classified as preventative care. This supports proactive diabetes management, helping individuals monitor and maintain stable glucose levels effectively. This guidance is effective as of the effective date of Notice 2019-45 (July 17, 2019).
- Selected insulin products can now be covered by HDHPs without a deductible, irrespective of whether they are prescribed for diabetes treatment, prevention of exacerbation, or prevention of secondary conditions. This guidance is effective for plan years (in the individual market, policy years) beginning after December 31, 2022.
These changes provide broader access to preventative care and encourage proactive health management.
Impact on Limited Purpose Flexible Spending Accounts (LPFSAs) and Limited Purpose Health Reimbursement Arrangements (HRAs)
With the IRS’s new guidance, LPFSAs and LPHRAs must adapt to encompass these expanded preventive care benefits. This change means that expenses related to the newly covered items are now eligible for reimbursement, enhancing the flexibility and utility of these accounts.
For example, an employee using a Limited Purpose FSA can now allocate funds toward purchasing over-the-counter contraceptives, male condoms, and continuous glucose monitors without affecting their eligibility for Health Savings Account (HSA) contributions. Similarly, LPHRAs can cover these expenses, providing employees with greater financial support for preventive health measures.
Impact on Limited Purpose Healthcare Flexible Spending Accounts (LPFSAs)
By broadening the scope of eligible expenses, employees can maximize the use of their pre-tax contributions or employer provided LPHRA benefits, thereby stretching their healthcare dollars further. This is particularly advantageous for employees who use FSAs to budget annually for anticipated medical expenses. With the newly covered preventive services and products, employees can allocate FSA funds to essentials like over-the-counter contraceptives and continuous glucose monitors without cutting into their budget for other medical expenses, like copayments or prescriptions.
For example, an employee with an LPFSA can purchase over-the-counter contraceptives using LPFSA funds, reducing out-of-pocket expenses and encouraging responsible reproductive health management.
Conclusion
This expanded coverage helps employees access essential preventive services and products with less financial burden, fostering a healthier workforce and improving overall well-being.
For HR directors, plan sponsors, and benefit managers, this update presents an opportunity to enhance health benefits for employees. Clear communication of these changes is important to ensure employees maximize the benefits available to them.
For more details on these changes, please check out our detailed expanded coverage PDF.
To further optimize your healthcare benefits strategy, consider consulting with healthcare experts or legal advisors to ensure compliance and maximize the value of these expanded preventive care benefits.
FAQs
1. What is the Notice 2024-75 released by the IRS?
Notice 2024-75 expands the list of preventive care coverage allowed under high deductible health plans (HDHPs). This update allows certain preventive services and products to be provided without a deductible or at a deductible lower than the minimum required for HDHPs. The aim is to support proactive health management and improve preventative healthcare measures.
2. What are some of the newly covered preventive services and products under HDHPs?
The newly covered items include over-the-counter oral contraceptives, male condoms, breast cancer screenings, continuous glucose monitors for individuals diagnosed with diabetes, and selected insulin products. Each of these is now considered preventive care, and they can be covered by HDHPs without a deductible.
3. How does this IRS update impact Limited Purpose Flexible Spending Accounts (LPFSAs) and Limited Purpose Health Reimbursement Arrangements (HRAs)?
LPFSAs and LPHRAs must adapt to encompass these expanded preventive care benefits. This means that expenses related to the newly covered items are now eligible for reimbursement, enhancing the flexibility and utility of these accounts.
4. How does this change impact individuals with diabetes who have HDHPs?
Continuous glucose monitors and selected insulin products have been reclassified as preventive care. This means individuals with diabetes can now use their HDHP funds to purchase these items. This supports proactive diabetes management and helps keep glucose levels stable.
5. What is the overall impact of this expanded preventive care coverage update?
This expanded coverage allows individuals to access essential preventive services and products with less financial burden. It also provides HR directors, plan sponsors, and benefit managers with an opportunity to enhance health benefits for employees, promoting proactive health management and fostering a healthier workforce.
