n-19-45.pdf

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Additional Preventive Care Benefits Permitted to be Provided by a High Deductible
Health Plan Under § 223
NOTICE 2019-45
PURPOSE
This notice expands the list of preventive care benefits permitted to be provided by a
high deductible health plan (HDHP) under section 223(c)(2) of the Internal Revenue
Code (Code) without a deductible, or with a deductible below the applicable minimum
deductible (self-only or family) for an HDHP.
BACKGROUND
Section 223 of the Code permits eligible individuals to establish Health Savings
Accounts (HSAs). Among the requirements to qualify as an eligible individual under
section 223(c)(1) is that the individual be covered under an HDHP and have no
disqualifying health coverage. Only eligible individuals under section 223(c)(1) are
allowed to make contributions to an HSA or to receive contributions from an employer to
their HSA. An HDHP is a health plan that satisfies certain requirements with respect to
minimum deductibles and maximum out-of-pocket expenses.
Generally, under section 223(c)(2)(A), an HDHP may not provide benefits for any year
until the minimum deductible for that year is satisfied. However, section 223(c)(2)(C)
provides a safe harbor for the absence of a deductible for preventive care. Under
section 223(c)(2)(C), “[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 1861 of the Social Security Act, except as otherwise provided by the
Secretary).” Therefore, an HDHP may provide preventive care benefits without a
deductible or, subject to any applicable requirements under section 2713 of the Public
Health Service Act (PHS Act), with a deductible below the minimum annual deductible
otherwise required by section 223(c)(2)(A). To be a preventive care benefit as defined
for purposes of section 223, the benefit must either be described as preventive care for
purposes of section 1861 of the Social Security Act (SSA) or be determined to be
preventive care in guidance issued by the Department of the Treasury (Treasury
Department) and the Internal Revenue Service (IRS).
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Notice 2004-23 (2004-1 C.B. 725), and Q&As 26 and 27 of Notice 2004-50 (2004-2 C.B.
196), provide guidance on preventive care benefits allowed to be provided by an HDHP

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The determination of whether an item or service is preventive care for these purposes is unrelated to the
determination of whether an amount paid for an item or service is medical care under section 213(d) as an amount
paid for the prevention of disease.

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without regard to the minimum deductible requirement of section 223(c)(2)(A). Notice
2004-23 clarifies that preventive care generally does not include any service or benefit
intended to treat an existing illness, injury, or condition.
Notice 2013-57 (2013-40 I.R.B. 293) provides that any item that is a preventive service
under section 2713 of the PHS Act will also be treated as preventive care under
section 223(c)(2)(C) of the Code.
Section 1001 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148,
124 Stat. 119 (2010)(PPACA), added section 2713 to the PHS Act, requiring non-
grandfathered group health plans and health insurance issuers offering group and
individual health insurance coverage to provide benefits for certain preventive health
services without imposing cost-sharing requirements.
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The PPACA also added
section 715(a)(1) to the Employee Retirement Income Security Act of 1974 (ERISA) and
section 9815(a)(1) to the Code to incorporate the provisions of part A of title XXVII of
the PHS Act, including section 2713, into ERISA and the Code. Guidance under section
2713 of the PHS Act is published jointly by the Treasury Department and IRS and the
Departments of Labor and Health and Human Services (HHS).
Notice 2004-50, Q&A 26, provides that any treatment incidental or ancillary to
preventive care services described in Notice 2004-23 is within the preventive care safe
harbor if it would be unreasonable or impracticable to perform another procedure to
treat the condition. Notice 2004-50, Q&A 27, provides that drugs or medications are
preventive care when taken by a person who has developed risk factors for a disease
that has not manifested itself or become clinically apparent, or to prevent the
reoccurrence of a disease from which a person has recovered.
Notice 2018-12 (2018-12 I.R.B. 441) clarified that benefits for male sterilization or male
contraceptives are not preventive care under the SSA, and no applicable guidance
issued by the Treasury Department and the IRS provides for including these benefits in
the definition of preventive care within the meaning of section 223(c)(2)(C). Accordingly,
subject to certain transition relief, the notice provides that a health plan that provides
benefits for male sterilization or male contraceptives before satisfying the minimum
deductible for an HDHP under section 223(c)(2)(A) does not constitute an HDHP,
regardless of whether the coverage of such benefits is required by state law.
PREVENTIVE CARE AND CHRONIC CONDITIONS
The Treasury Department and the IRS have been directed to consider ways to expand
the use and flexibility of HSAs and HDHPs consistent with the provisions of section 223

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42 U.S.C. 300gg-13.

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and the appropriate standard for preventive care under section 223(c)(2)(C).
Specifically, on June 24, 2019, President Trump issued Executive Order 13877,
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“Improving Price and Quality Transparency in American Healthcare to Put Patients
First,” including, among other things, an order that the Secretary of Treasury, to the
extent consistent with law, issue guidance to expand the ability of patients to select
HDHPs that can be used alongside an HSA, and that cover low-cost preventive care,
before the deductible, that helps maintain health status for individuals with chronic
conditions. In response to Executive Order 13877, the Treasury Department and the
IRS are issuing this notice. The Treasury Department and the IRS continue to consider
appropriate standards for differentiating between services and items that would be
considered preventive care for purposes of section 223(c)(2)(C) and those that would
not.
As explained above, in prior guidance the Treasury Department and the IRS have
stated that preventive care generally does not include any service or benefit intended to
treat an existing illness, injury, or condition. However, the Treasury Department and the
IRS are aware that the cost barriers for care have resulted in some individuals who are
diagnosed with certain chronic conditions failing to seek or utilize effective and
necessary care that would prevent exacerbation of the chronic condition. Failure to
address these chronic conditions has been demonstrated to lead to consequences,
such as amputation, blindness, heart attacks, and strokes that require considerably
more extensive medical intervention.
The Treasury Department and the IRS, in consultation with HHS, have determined that
certain medical care services received and items purchased, including prescription
drugs, for certain chronic conditions should be classified as preventive care for
someone with that chronic condition. These medical services and items are limited to
the specific medical care services or items listed in the attached Appendix for the
chronic conditions specified in the Appendix. In making this determination, the Treasury
Department and IRS are exercising the Secretary’s authority under section 223(c)(2)(C).
In determining that these particular medical services and items are classifiable as
preventive care with respect to an individual with the relevant chronic condition,
consistent with the structure and purposes of section 223, the Treasury Department and
the IRS noted that each medical service or item, when prescribed for an individual with
the related chronic condition, evidences the following characteristics:
• The service or item is low-cost;

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84 FR 30849 (Jun. 27, 2019).

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• There is medical evidence supporting high cost efficiency (a large
expected impact) of preventing exacerbation of the chronic condition or
the development of a secondary condition; and
• There is a strong likelihood, documented by clinical evidence, that with
respect to the class of individuals prescribed the item or service, the
specific service or use of the item will prevent the exacerbation of the
chronic condition or the development of a secondary condition that
requires significantly higher cost treatments.

These criteria were used in determining the particular services and items listed in the
Appendix, but this notice does not expand the scope of preventive care beyond the list.
Therefore, services or items that meet (or may meet) the criteria but are not on the list
are not treated as preventive care as a result of this notice or on any other basis (but
see the Effect On Other Documents section of this notice regarding the continued
applicability of previous guidance).
The Treasury Department and the IRS, in consultation with HHS, will periodically review
the list of preventive care services and items listed in the Appendix and similar services
and items to determine whether additional services or items should be added or any
should be removed from the list. The periodic review is expected to occur approximately
every five to ten years to promote stability and to avoid confusion by participants in, or
sponsors or providers of, HDHP arrangements.

LIST OF ADDITIONAL PREVENTIVE CARE SERVICES AND ITEMS FOR CHRONIC
CONDITIONS THAT MAY BE TREATED AS PREVENTIVE CARE FOR PURPOSES
OF SECTION 223(c)(2)(C)
The Treasury Department and the IRS consider benefits for services and items set forth
in the Appendix to this notice as preventive care for purposes of section 223(c)(2)(C).
These specified services and items are treated as preventive care only when prescribed
to treat an individual diagnosed with the associated chronic condition specified in the
Appendix, and only when prescribed for the purpose of preventing the exacerbation of
the chronic condition or the development of a secondary condition. If an individual is
diagnosed with more than one chronic condition, all listed services and items applicable
to the two or more conditions are preventive care. However, services and items not
listed in the Appendix that are for secondary conditions or complications that occur
notwithstanding the preventive care are not treated as preventive care for purposes of
section 223(c)(2)(C).
EFFECT ON OTHER DOCUMENTS

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Any services and items that constitute preventive care under the guidance in
Notice 2004-23, Notice 2004-50, and Notice 2013-57 continue to be treated as
preventive care for purposes of section 223. Although this notice clarifies that benefits
for the specified services and items for individuals with the specified chronic conditions
listed in the Appendix are preventive care for purposes of section 223(c)(2)(C), it does
not treat these services and items as preventive care required to be provided without
cost sharing for purposes of section 2713 of the PHS Act. Accordingly, this notice does
not affect the definition of preventive care provided in § 54.9815-2713.

EFFECTIVE DATE
This notice is effective as of July 17, 2019.
DRAFTING INFORMATION
The principal author of this notice is William Fischer of the Office of Associate Chief
Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), though
other Treasury Department and IRS officials participated in its development. For further
information on the provisions of this notice, contact Mr. Fischer at (202) 317-5500 (not a
toll-free number).

ATTACHMENT

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APPENDIX
Preventive Care for Specified Conditions For Individuals Diagnosed with
Angiotensin Converting Enzyme (ACE) inhibitors Congestive heart failure, diabetes, and/or
coronary artery disease
Anti-resorptive therapy Osteoporosis and/or osteopenia
Beta-blockers Congestive heart failure and/or coronary artery
disease
Blood pressure monitor Hypertension
Inhaled corticosteroids Asthma
Insulin and other glucose lowering agents Diabetes
Retinopathy screening Diabetes
Peak flow meter Asthma
Glucometer Diabetes
Hemoglobin A1c testing Diabetes
International Normalized Ratio (INR) testing Liver disease and/or bleeding disorders
Low-density Lipoprotein (LDL) testing Heart disease
Selective Serotonin Reuptake Inhibitors (SSRIs) Depression
Statins Heart disease and/or diabetes