n-04-23.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Notice 2004-23

PURPOSE
This notice provides a safe harbor for preventive care benefits allowed to
be provided by a high deductible health plan (HDHP) without satisfying the
minimum deductible under section 223(c)(2) of the Internal Revenue Code.

BACKGROUND

Section 1201 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, Pub. L. No. 108-173, added section 223 to the
Internal Revenue Code to permit eligible individuals to establish Health Savings
Accounts (HSAs) for taxable years beginning after December 31, 2003.

Among the requirements for an individual to qualify as an eligible
individual under section 223(c)(1) (and thus to be eligible to make tax-favored
contributions to an HSA) is the requirement that the individual be covered under
an HDHP. An HDHP is a health plan that satisfies certain requirements with
respect to minimum deductibles and maximum out-of-pocket expenses.
Generally, an HDHP may not provide benefits for any year until the deductible for
that year is satisfied. However, section 223(c)(2)(C) provides a safe harbor for
the absence of a preventive care deductible. That section states, “[a] plan shall
not fail to be treated as a high deductible health plan by reason of failing to have
a deductible for preventive care (within the meaning of section 1871 of the Social
Security Act, except as otherwise provided by the Secretary).” An HDHP may
therefore provide preventive care benefits without a deductible or with a
deductible below the minimum annual deductible. On the other hand, there is no
requirement in section 223 that an HDHP provide benefits for preventive care or
provide preventive care with a deductible below the minimum annual deductible.

PREVENTIVE CARE SAFE HARBOR

Preventive care for purposes of section 223(c)(2)(C) includes, but is not
limited to, the following:

• Periodic health evaluations, including tests and diagnostic procedures
ordered in connection with routine examinations, such as annual
physicals.

• Routine prenatal and well-child care.

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• Child and adult immunizations.

• Tobacco cessation programs.

• Obesity weight-loss programs.

• Screening services (see attached APPENDIX).

However, preventive care does not generally include any service or benefit
intended to treat an existing illness, injury, or condition (See below for request for
comments regarding drug treatments.)

INTERACTION WITH STATE LAW HEALTH CARE REQUIREMENTS

Section 220(c)(2)(B)(ii) allows a high deductible health plan for purposes
of an Archer Medical Savings Account to provide preventive care without a
deductible if required by State law. However, section 220 does not define
preventive care for this purpose. Section 223(c)(2)(C), for purposes of an HSA,
does not condition the exception for preventive care on State law requirements.
State insurance laws often require health plans to provide certain health care
without regard to a deductible or on terms no less favorable than other care
provided by the health plan. The determination of whether health care that is
required by State law to be provided by an HDHP without regard to a deductible
is “preventive” for purposes of the exception for preventive care under section
223(c)(2)(C) will be based on the standards set forth in this notice and other
guidance issued by the IRS, rather than on how that care is characterized by
State law.

COMMENTS REQUESTED

Notice 2004-2, 2004-2 I.R.B. 269, requested comments concerning the
appropriate standard for preventive care in section 223(c)(2)(C). We continue
to request comments on the appropriate standard for preventive care, and in
particular, recommendations concerning any benefit or service that should be
added to those set forth in this notice and appendix. In addition, we request
comments on the extent to which benefits provided by an employee
assistance program, mental health program or wellness program may qualify
as preventive care, including comments regarding the scope of treatments
provided as benefits through counseling and health assessments. In
particular, we request comments on the extent to which drug treatments,
either solely by prescription or as part of an overall treatment regimen should
be treated as preventive care and the appropriate standards for differentiating
between drug treatments that would be considered preventive care and those
that would not be considered preventive care.

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Send comments to: CC:PA:LPD:PR (Notice 2004-2), Room 5203,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC
20044. Comments may be hand-delivered between the hours of 8 a.m. and 4
p.m. to: CC:PA:LPD:PR (Notice 2004-2), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW, Washington, D.C. Alternatively,
taxpayers may submit comments electronically at:
Notice.2004.2.Comments@irscounsel.treas.gov (a Service Comments e-mail
address).

DRAFTING INFORMATION
The principal author of this notice is Shoshanna Tanner of the Office of
Division Counsel/Associate Chief Counsel (Tax Exempt and Government
Entities). For further information regarding this notice contact Ms. Tanner on
(202) 622-6080 (not a toll-free call).

APPENDIX
Safe Harbor Preventive Care Screening Services

Cancer Screening
Breast Cancer (e.g., Mammogram)
Cervical Cancer (e.g., Pap Smear)
Colorectal Cancer
Prostate Cancer (e.g., PSA Test)
Skin Cancer
Oral Cancer
Ovarian Cancer
Testicular Cancer
Thyroid Cancer

Heart and Vascular Diseases Screening
Abdominal Aortic Aneurysm
Carotid Artery Stenosis
Coronary Heart Disease
Hemoglobinopathies
Hypertension
Lipid Disorders

Infectious Diseases Screening
Bacteriuria
Chlamydial Infection
Gonorrhea
Hepatitis B Virus Infection
Hepatitis C
Human Immunodeficiency Virus (HIV) Infection
Syphilis
Tuberculosis Infection

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Mental Health Conditions and Substance Abuse Screening
Dementia
Depression
Drug Abuse
Problem Drinking
Suicide Risk
Family Violence

Metabolic, Nutritional, and Endocrine Conditions Screening
Anemia, Iron Deficiency
Dental and Periodontal Disease
Diabetes Mellitus
Obesity in Adults
Thyroid Disease

Musculoskeletal Disorders Screening
Osteoporosis

Obstetric and Gynecologic Conditions Screening
Bacterial Vaginosis in Pregnancy
Gestational Diabetes Mellitus
Home Uterine Activity Monitoring
Neural Tube Defects
Preeclampsia
Rh Incompatibility
Rubella
Ultrasonography in Pregnancy

Pediatric Conditions Screening
Child Developmental Delay
Congenital Hypothyroidism
Lead Levels in Childhood and Pregnancy
Phenylketonuria
Scoliosis, Adolescent Idiopathic

Vision and Hearing Disorders Screening
Glaucoma
Hearing Impairment in Older Adults
Newborn Hearing