EBRI Issue Brief

The Impact of Expanding Pre-Deductible Coverage in HSA-Eligible Health Plans on Employee Choice of Health Plan and Cost Sharing

Jul 27, 2023 20  pages


IRS Notice 2019-45 allows health savings account (HSA)-eligible health plans the flexibility to cover 14 medications and other health services used to prevent the exacerbation of chronic conditions prior to meeting the plan deductible. There is currently no research on the impact of expanding pre-deductible coverage on plan members. In this Issue Brief, we use claims data to quantify the effect of expanding pre-deductible coverage on enrollee choice of health plan and cost sharing.

Key Findings:

  • Cost sharing shifted from deductibles to copayments and coinsurance among enrollees in HSA-eligible health plans for a number of services impacted by IRS Notice 2019-45. The same shift was not observed for enrollees in other types of health plans.
  • IRS Notice 2019-45 appears to have had a negligible impact on overall cost sharing as a percentage of total spending on a number of services impacted by the notice. This may be due to the fact that employers were more likely to change cost sharing instead of eliminating it.
  • Enrollment in HSA-eligible health plans among individuals with health conditions impacted by the IRS notice does not appear to have changed, as it was already trending in the direction of higher enrollment among individuals with health conditions prior to the issue of the notice.

Employers would add additional services if allowed by the IRS. There is also bipartisan, bicameral legislation that has been introduced in the U.S. Congress that would provide additional flexibility to extend pre-deductible coverage to services that manage chronic conditions. Employers and policymakers have an appetite for more flexible plan designs or "smarter" deductibles, because rising health care spending has created serious fiscal challenges.

This study was conducted through the EBRI Center for Research on Health Benefits Innovation (EBRI CRHBI), with the funding support of the following organizations: Aon, Blue Cross Blue Shield Association, ICUBA, JP Morgan Chase, Pfizer, and PhRMA.