The HSA Conundrum (article)
Health savings account (HSA) eligibility continues to be fraught with challenges. As discussed in last month’s Benefit Beat (see HSA Eligibility: A Cautionary Tale, 2/7/18), to be eligible for an HSA, an individual can only be covered by a qualified high deductible health plan (HDHP). One of the requirements of a qualified HDHP is that it must meet a statutory deductible standard. Medical expenses, with the exception of preventive health services, cannot be reimbursed by any health plan until the minimum statutory deductible of an HDHP is satisfied.
Some states, Maryland, for example, have passed laws requiring insured plans to cover male sterilization for low or no deductible. This has raised a question about whether male sterilization or male contraceptive services qualify as preventive health services. The IRS has determined, by way of IRS Notice 2018-12, that male sterilization or male contraceptive services are not deemed to be preventive health services at this time. The IRS sets forth some transition relief for years prior to 2020, providing that if an individual is covered by a plan that is required to include this type of disqualifying coverage, then the individual will remain HSA-eligible. However, beginning in 2020, the individual would become HSA-ineligible. This transition relief is being granted to give states an opportunity to change their insurance laws, if they deem it appropriate.
Other types of programs likewise constitute a trap for the unwary such as telemedicine programs, on-site clinics or value-based health plans that provide medical services prior to satisfaction of the deductible.
We will be discussing this topic, along with other HSA matters, in our upcoming CBIZ Benefits & Insurance webinar on September 18th. To register for “The Compatibility Factor: Making HSAs Work With Your Employee Benefits Plan”, click here.