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Preventive Care and HSAs

 

If you have a high deductible health care plan and already contribute to an HAS, or would like to start, IRS has released an expanded list of preventive care costs that are eligible to be paid through an HSA.

 

First, what is a high deductible health plan (HDHP)? 

 

The definition of an HDHP  according to www.healthinsurance.org is

 

In lay terms, a high-deductible health plan could simply be considered a policy with a high deductible. But the term “high-deductible health plan,” or HDHP, is specific to plans that not only have high deductibles, but also conform to other established federal guidelines.

 

HDHPs cover preventive care before the deductible – the ACA requires this of all plans – but under an HDHP, no other benefits are provided until the insured has met the deductible. That means HDHPs cannot have copays for office visits or prescriptions prior to the deductible being met (as opposed to a plan that’s got a high deductible but also offers copays for office visits from the get-go; people might generally consider the latter to be a high deductible plan, but it’s not an HDHP).   So with an HDHP, you’ll have to pay out-of-pocket for everything other than preventive care until you hit your deductible. After that, the insurance will pay benefits based on the plan’s coinsurance level (many HDHPs have 100 percent coverage after the deductible).

 

For 2018 coverage, the minimum required deductibles for HDHPs increased to at least $1,350 for an individual, and $2,700 for a family. And the upper limit on total out-of-pocket exposure under an HDHP in 2018 also increased to $6,650 for an individual, and $13,300 for a family.

 

Source: https://www.healthinsurance.org/glossary/high-deductible-health-plan/
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The HDHP is the only plan which allows for setting up an HSA to help offset the cost of such plans by placing tax deductible funds into the HSA account to pay for those items that go toward the deductible.  And Notice 2019-45 released by the IRS has expenses the list of preventive care items the HSA funds are able to cover.   You can read more about Notice 2019-45 here: https://www.irs.gov/newsroom/irs-expands-list-of-preventive-care-for-hsa-participants-to-include-certain-care-for-chronic-conditions

 

A complete copy of publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

can be viewed here: https://www.irs.gov/publications/p969

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