Copay accumulator legislation 20222/28/2024 ![]() Health plans that are self-insured by the employer and covered by ERISA, among others, are exempt from state regulation.Ī self-insured health plan is one where the employer itself collects premiums from enrollees and takes on the responsibility of paying medical claims of those covered by the health plan. The laws only apply to health plans subject to state regulation. There’s good news for participants that in live in states that have passed these mandates, but still want to contribute to an HSA. No application to ERISA covered, self-insured health plans Unfortunately, no such relief has currently been contemplated by the IRS when it comes to copay accumulator adjustment law changes. The IRS also allows states to change their laws so as not to disqualify a health plan as a qualifying HDHP. Since a qualifying HDHP can only provide preventive care before the minimum deductible is met, participants in otherwise qualifying HDHPs impacted by these mandates were disqualified from contributing to an HSA.įortunately, the IRS provided transitional relief in these cases ( Notice 2018-12)* to help alleviate ineligible HSA contributions made before participants realized the impact of these changes. In recent years, Illinois, Oregon, Maryland and Vermont all passed laws requiring health plans they regulate to cover male sterilization and/or male contraceptives at no cost to all health plan participants (such coverage is not considered preventive care). State law changes that impact HSA eligibility are not unprecedented. It is worth noting that there is no issue created with HSA eligibility where health plan design applies the value of financial assistance to a participant’s cost sharing or deductible, once the individual meets the minimum deductible under the qualifying HDHP. Even if the health plan participant never takes advantage of the financial assistance, the mere fact that the health plan would count such assistance toward the deductible means the participant can’t contribute to an HSA. State laws requiring a health plan to count amounts not actually incurred by the covered individual for non-preventive care before the minimum annual deductible is met do not comply with the IRS’ ruling and make the individual ineligible for an HSA. In this letter, the IRS reiterates that only actual medical expenses incurred by the covered individual can count toward the qualifying HDHP minimum deductible.įor example, if a manufacturer’s coupon reduces a drug’s cost from $1,000 to $600, the amount that may be credited toward satisfying the qualifying HDHP deductible is $600 (the amount actually incurred by the covered individual), not $1,000. IRS Information Letter (2021-0014)* was published in response to a question about the state of Illinois’ copay accumulator adjustment program law change. Preventive care generally does not include any service or benefit intended to treat an existing illness, injury, or condition.Ī health plan that counts financial assistance toward the deductible-unless it’s related to preventive care only-is considered to be operating outside qualifying HDHP requirements. The only allowed exception to this requirement is preventive care benefits, which can be provided by the health plan before the deductible is met (e.g., annual physicals, immunizations, certain screenings, etc.). One of the key requirements of a qualifying HDHP is that a minimum deductible (as set by law each year) must be met before benefits under the health plan can begin. ![]() ![]() Internal Revenue Code Section 223 requires that an individual must be enrolled in a qualifying high deductible health plan (HDHP) to contribute to an HSA, and cannot otherwise have disqualifying health coverage. These state mandates have a major impact on individuals’ eligibility for HSAs. ![]() These new state laws mandate that health plans include any amount paid by a participant, or on behalf of a participant by another party, when calculating the participant’s total contribution to an out-of-pocket maximum, deductible, copayment, coinsurance or other cost-sharing requirement-including drug manufacturer cost assistance. Over the past few years, states looking to help health plan participants with the ever increasing cost of care overall have begun to pass laws that forbid health plans from implementing or enforcing copay accumulator adjustment programs. These programs aim to steer participants toward lower-cost drug options (e.g., generics) that don’t take advantage of this assistance. In order to prevent this assistance from counting toward a participant’s deductible and annual maximum out-of-pocket cost obligations, many health plans have implemented “copay accumulator adjustment” programs. Prescription drug manufacturers commonly offer various forms of financial assistance to help cover the cost of certain specialty and/or expensive non-generic drugs, including through coupons, discounts and vouchers.
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