Press Room
 

FROM THE OFFICE OF PUBLIC AFFAIRS

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March 30, 2004
JS-1278

Treasury Issues Additional Guidance on
Health Savings Accounts (HSAS)

Today the Treasury Department and the IRS issued additional guidance on Health Savings Accounts (HSAs).  The guidance clarifies the types of preventive care that can be provided under a high deductible health plan (HDHP) and the interaction between an HDHP and other prescription drug benefits.  In addition, guidance is being issued to provide transitional relief for the prescription coverage interaction as well as allowing HSAs to reimburse medical expenses incurred after the establishment of the HDHP (rather than the establishment of the HSA).
 
“HSAs are an historic change in the way we look at health care,” stated Secretary Snow. “We want to make it easy for those designing HSAs to comply with the rules and help consumers understand how HSAs can help them meet their health care needs,” stated Acting Assistant Secretary Gregory Jenner. “The industry asked for more specific guidance on what is allowed as preventive care under a high deductible health plan and for clarification of the allowable interaction between the HDHP and prescription drug benefits.  Today we are delivering that guidance, and hope that those providing high deductible health plans and those marketing HSAs will be able to make HSAs available to all consumers as quickly as possible.”
 
PREVENTIVE CARE HSAs can only be established by eligible individuals, who must have coverage by a high deductible health plan (HDHP).  Generally, an HDHP cannot provide benefits before the deductible is satisfied, but there is an exception for benefits for preventive care.  The guidance issued today provides a safe harbor list of benefits that can be provided by an HDHP,  generally clarifying that traditional preventive care benefits –  such as annual physicals, immunizations and screening services – are preventive care for purposes of HSAs, as well as routine prenatal and well-child care, tobacco cessation programs and obesity weight-loss programs.  The guidance also clarifies that preventive care generally does not include treatment of existing conditions. Comments are requested regarding whether other benefits should qualify as preventive care, including payments of certain drug costs benefits provided by employee assistance programs, mental health programs, or wellness programs.  The safe harbor provides employers and plans with the flexibility in designing health benefits, allowing them to provide preventive care benefits that reduce health costs and encourage early identification of health conditions that may require medical attention.

INTERACTION OF HDHP BENEFITS WITH PRESCRIPTION BENEFITS AND TRANSITIONAL RELIEF Prior guidance noted that an eligible individual must be covered by an HDHP and generally no other health plan that is not an HDHP.  Guidance issued today clarifies that individuals covered by a health plan that provides prescription drug benefits before the minimum annual deductible of an HDHP has been satisfied may not make contributions to an HSA.  However, companion guidance also issued provides transition relief to those individuals covered by both an HDHP and by a separate health plan or rider that provides prescription drug benefits before the deductible of the HDHP is satisfied.  Under the relief, such individuals continue to be eligible to contribute to HSAs before 2006. 
 
MEDICAL EXPENSE TRANSITION RELIEF Prior guidance provided that HSAs may only reimburse medical expenses incurred after the HSA is established.  However, many individuals eligible to establish HSAs have been unable to locate trustees or custodians will and able to open HSAs at this time.  Guidance issued today provides that for 2004, an HSA established by an eligible individual on or before April 15, 2005 may reimburse expenses incurred on or after the later of January 1, 2004 or the first day of the first month that the individual became an eligible individual.

 

REPORTS