The guidance from the Internal Revenue Service and the Treasury Department will create new flexibility for high-deductible health plans linked to special pretax health savings accounts, or HSAs. These savings accounts have taken off in recent years and now are used by more than 20 million people facing steep deductibles.
Consumers with these plans have to pay their deductibles before their insurers cover treatment, unless the care is considered preventive, such as a mammogram. That has left people with ongoing medical conditions paying largely out of pocket for blood-pressure monitors, antidepressants and inhalers.
Under the new guidance, patients in these plans with HSAs could save money because insurers would cover treatments for chronic conditions such as regular diabetes vision screening or medications even if people haven’t paid down their deductible, which can sometimes be in the thousands of dollars, senior White House officials said.
The change has long been sought by employers, insurers and patient advocacy groups.
“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,” according to a draft of the guidance reviewed by the Wall Street Journal.
Because the change is being issued as a guidance, it doesn’t require a formal rule-making process and could be incorporated into health plans being offered in 2020.
Some critics have said changes could spur the spread of high-deductible plans with the pretax health savings accounts. They say the trend is hurting consumers because they force them to pay more for their own care or put off treatment. But support for easing the restrictions on what the plans can pay for, pre-deductible, has been strong and building in recent years from those who say people with chronic conditions are unfairly bearing the financial brunt under the plans now.
The change will benefit some of the 133 million people who have ongoing medical problems such as diabetes and marks the second phase of a broader push the Trump administration announced last week to improve kidney disease treatment.
The goal is largely to ensure consumers in these plans can afford and obtain treatment for chronic conditions such as diabetes and heart disease to stave off more costly, debilitating health problems, senior administration officials said.
“It a really smart way to decrease the out-of-pocket costs for millions,” said Katy Spangler, co-director of the Smarter Healthcare Coalition, which has pushed for the change.
High-deductible health plans have become increasingly commonplace and have shifted more of the financial burden for health care to consumers. The IRS defines the plans as having a deductible of at least $1,350 for an individual in 2019 or $2,700 for a family. The idea behind the plans is to help curtail spending by requiring patients to have more of their own money at stake.
Accompanying HSAs were created in 2003. Employers, workers and others can contribute to the account with pretax dollars. People in high-deductible plans can then use their HSAs to pay for eligible treatments or care at any time without federal tax liability or penalty.
Critics of HSAs have said they largely benefit higher-wage workers who can afford to contribute to the accounts. Republicans have pushed to increase the use of HSAs, saying they are a possible fix for the burden of high health-care costs in the U.S. People can invest in the accounts and grow them over time.
The guidance is likely to enjoy some bipartisan support. Sens. John Thune (R., S.D.) and Tom Carper (D., Del.) have introduced legislation that would let high-deductible high plans used with HSAs cover chronic-disease care prior to consumers reaching their deductible.
The guidance means certain medical treatments or services for people with chronic conditions will essentially be considered preventive, according to the senior White House officials.
There will be some conditions: The service or item must prevent a health condition such as diabetes from getting worse. It must be low-cost, such as testing strips. Patients would have to face a strong likelihood they would face significantly more health costs to treat a condition if the service or item isn’t provided.
The guidance stems from President Trump’s June 24 executive order on price disclosure in health care. The order called for guidance to expand HSAs to maintain the health status of people with chronic conditions.
The administration has wanted changes to plans that qualify for HSAs for some time. Last year, the White House said any plan to shore up the Affordable Care Act should include changes to high-deductible plans with HSAs so they can cover treatment for chronic conditions before deductibles are met.