Employer Uptake of Pre-Deductible Coverage for Preventive Services in HSA-Eligible Health Plans

Summary

IRS Notice 2019-45 allows health savings account (HSA)-eligible health plans the flexibility to cover 14 medications and services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible. 

In this Issue Brief, we report on the findings from a 2021 Employee Benefit Research Institute (EBRI) survey of employers that collected information on their response to the 2019 guidance.  The survey examined not only whether employers added pre-deductible coverage as a result of Notice 2019-45, but also examined each of the allowed services individually; the type of cost sharing, if any, used in lieu of deductibles; and other relevant questions. 

Key findings:

• Three in four employers (76 percent) say that they have added pre-deductible coverage as a result of IRS Notice 2019-45.
• Pre-deductible coverage was often added for health care services related to heart disease and diabetes care.  Two-thirds added pre-deductible coverage for blood pressure monitors and insulin/glucose lowering agents, 61 percent added coverage for glucometers, and 54 percent added coverage for beta blockers. Health care services least likely to have pre-deductible coverage include peak flow meters and INR testing (25 percent each).
• Nearly two-thirds (64 percent) of employers covered six or fewer of the 14 health care services allowed per IRS Notice 2019-45.  Only 8 percent added pre-deductible coverage for all 14 services. 
• The percentage of employers that eliminated cost sharing for the pre-deductible services ranged from a low of 25 percent to a high of 40 percent. Between nearly one-half and two-thirds require a copayment from employees, depending on the health care service.
• Between 57 percent and 69 percent provide pre-deductible coverage for both brand and generic drugs in the specified drug classes.
• Most employers would add pre-deductible coverage for additional health care services if allowed by law. 
• Employers offered several reasons for adding pre-deductible coverage: for the sake of their employees (74 percent), employee retention (64 percent), employee attraction (52 percent), and as a long-term cost-saving measure (48 percent).
• Nearly all (96 percent) employers adopted pre-deductible coverage for telehealth services under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Three-quarters (76 percent) prefer to make the provision permanent, while only 20 percent would like the provision to remain temporary.
• Among employers that did not add pre-deductible coverage as a result of IRS Rule 2019-45, most either plan to do so later (32 percent) or are exploring whether to do so (61 percent).

While a substantial amount of pre-deductible coverage has been added, there is an appetite among employers for adding more services if allowed by the IRS, and there is also an appetite among policymakers as evidenced by The Chronic Disease Management Act, which was reintroduced in the U.S. Congress as recently as May 2021.  This bipartisan, bicameral legislation would provide HSA-eligible health plans additional flexibility to provide pre-deductible coverage for services that manage chronic conditions.