The IRS recently released Notice 2019-45 which expands the list of preventive care allowed with health savings accounts (HSAs). This notice focuses on treatment and testing for individuals diagnosed with certain chronic conditions, making care and prevention more affordable to taxpayers with high deductible health care plans.
Created in 2003, HSAs have become an increasingly popular tool available to the public for saving tax-free dollars to be used for medical expenses. Single individuals can contribute up to $3,500 before tax and families $7,000 in 2019. A great tax-saving tool, these accounts rollover automatically every year and grow tax-free over time.
You might think “what’s the catch?” Well for tax-preferred treatment of an HSA, the individual must also be covered by a high deductible health plan (HDHP). While having a high deductible might not sound ideal, the IRS does provide a safe harbor for certain medical care. Section 223 of the Internal Revenue Code notes a qualified plan “shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for preventive care.”
So what does that mean? And what is considered preventive care? Prior to 2019, this safe harbor generally meant taxpayers could see a health care professional for things like annual check-ups, immunizations, and various screenings with costs being covered by their HDHP. While this still holds true, the IRS’s most recent update now provides greater coverage to individuals diagnosed with or at risk to conditions such as diabetes, asthma, heart disease, etc. This is great news for taxpayers who were previously unable to afford care or were spending their own money.
|Preventive Care for Specified Conditions||For Individuals Diagnosed with|
|Angiotensin Converting Enzyme (ACE) inhibitors||Congestive heart failure, diabetes, and/or coronary artery disease|
|Antiresorptive therapy||Osteoporosis and/or osteopenia|
|Beta-blockers||Congestive heart failure and/or coronary artery disease|
|Blood pressure monitor||Hypertension|
|Insulin and other glucose lowering agents||Diabetes|
|Peak flow meter||Asthma|
|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|
Source: IRS Notice 2019-45
Do you still have any questions? Feel free to reach out to a Henry+Horne tax professional to help assist you.