On October 17, 2024, the IRS published Notice 2024-75 (Notice), expanding preventive care benefits that can be provided under a high deductible health plan (HDHP) before an individual reaches the applicable minimum HDHP deductible, including non-mammogram breast cancer screenings, continuous glucose monitors, and certain contraceptives. The IRS has also announced potential future guidance on whether certain contraceptive coverage may be required.
By way of background, an individual is only eligible to participate in a tax-favored health savings account (HSA) if the individual is covered under an HDHP, with no disqualifying health coverage. The HDHP is generally not permitted to provide benefits until the minimum deductible for that year is satisfied. Section 223(c)(2)(C) of the Internal Revenue Code (Code), however, allows plans to provide preventive care even before the individual meets the minimum deductible. The IRS has provided guidance over the years regarding what does or does not constitute preventive care, but plan sponsors have often questioned whether care that is similar to certain items specifically listed as preventive care in that prior guidance could also qualify.
Breast Cancer Screening
Prior guidance (IRS Notice 2004-23) specifically listed breast cancer screenings as preventive care, but only listed mammograms as an example of qualifying screenings. The Notice explains that the IRS is amending its prior guidance to provide that breast cancer screenings may include imaging other than mammograms. Specifically, the IRS clarified that mammograms, MRIs, ultrasounds, and “similar breast cancer screening services” can be provided before an individual satisfies the deductible under a HDHP. The guidance is effective retroactive to April 12, 2004 (the effective date of Notice 2004-23).
Continuous Glucose Monitors and Insulin
Prior guidance (IRS Notice 2019-45) provided that glucometers and insulin are treated as preventive care under Code Section 223(c)(2)(C) for individuals who have been diagnosed with diabetes. The Notice clarifies that continuous glucose monitors (CGM) for individuals diagnosed with diabetes are considered preventive care in the same circumstances as other glucometers if the CGM is measuring glucose levels using a similar detection method or mechanism to other glucometers (i.e., piercing the skin). If there are additional medical functions as part of the CGM (like insulin delivery) or non-medical functions, then those functions also need to fall under the definition of preventive care for the HDHP to cover it before the annual deductible is met. The CGM guidance is effective retroactive to July 17, 2019 (the effective date of Notice 2019-45).
The IRS also notes that selected insulin delivery devices are also preventive care, regardless of whether the insulin has been prescribed to treat diabetes or to prevent the “exacerbation of diabetes or the development of a secondary condition.” The insulin delivery guidance is effective retroactive to plan years beginning on or after December 31, 2022.
Contraception
The Notice expands eligible over-the-counter (OTC) preventive care items to include oral and emergency contraceptives available without a prescription. The IRS also changed their prior position regarding the coverage of male condoms; HDHPs may now cover male condoms regardless of whether the individual has a prescription and regardless of the gender of the covered individual who purchases them. On the same day, the IRS issued Notice 2024-71, which provides that amounts paid for condoms will be treated as amounts paid for medical care under Section 213(d) of the Code and thus will be eligible to be paid or reimbursed under a health flexible spending arrangement, health reimbursement arrangement, or HSA.
Next Steps
Notice 2024-75 offers valuable clarifications for healthcare service providers and employers with respect to preventive care benefits that can be offered before reaching the HDHP deductible, and Notice 2024-71 expands benefits available under tax-favored spending accounts. Employers who offer an HDHP, HSA, health flexible spending arrangement or health reimbursement arrangement should review these notices and work with their service providers to update relevant systems, plan documents and employee communications.
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