In Notice 2018-12
, the IRS stated that health plans providing benefits for male sterilization or male contraceptives with deductibles below the minimum deductible for a high-deductible health plan (HDHP) prescribed by Section 223(c)(2)(A) fail to qualify as HDHPs. Individuals not covered by an HDHP for any given month may not deduct contributions to a health savings account (HSA) for those months without coverage.
HDHPs must meet certain requirements with respect to minimum deductibles and maximum out-of-pocket expenses. In general, HDHPs must first satisfy the minimum deductible for a given year before providing any benefits for that year. However, Section 223(c)(2)(C) allows health insurance plans to still qualify as HDHPs while providing benefits for preventive care (defined under the Social Security Act, unless otherwise provided by the IRS) with no deductible, or with a deductible below the minimum HDHP deductible. According to Notice 2018-12, preventive care does not include benefits for male sterilization or male contraceptives. Therefore, HDHPs providing these benefits as preventive care fail to qualify as HDHPs. HSAs are similarly affected because individuals must be covered under an HDHP in order to remain eligible for the HSA.
Some states have adopted laws that require health insurance policies, including HDHPs, to provide benefits for male sterilization or male contraceptives without cost sharing, which means the benefit is paid before the plan’s deductible is met. As a result, individuals participating in health plans that otherwise qualify as HDHPs in these states cannot make deductible HSA contributions for the months in which the individuals are enrolled in these plans. The IRS recognized this problem and included transition relief in Notice 2018-12.
The IRS provides transition relief for all periods before 2020, including periods before the issuance of Notice 2018-12. If a health insurance policy or arrangement fails to qualify as an HDHP solely because of providing coverage for male sterilization or male contraceptives with no deductible or a deductible below the minimum HDHP deductible, the health plan will still be considered an HDHP and plan participants will continue to have HDHP coverage. As a result, participants in these plans may still make deductible contributions to HSAs for months before Jan. 1, 2020. This transition relief is meant to give states time to change their laws that require benefits for male sterilization or male contraceptives to be provided without a deductible.
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