- In a rule issued Wednesday, the IRS said potentially life-saving healthcare services and products, including prescription medications, used to treat common chronic diseases can be covered as preventive services in high-deductible consumer-directed health plans before enrollees with those conditions reach their annual deductible.
- The IRS used three criteria to determine which products and services to include in its list. They are inexpensive, cost-effective and evidence-based treatments that can prevent medical problems that are expensive to treat, such as amputations, blindness, heart attacks and strokes.
- Responding to an executive order issued last month, the IRS is addressing concerns that the large deductibles, which are a key feature of consumer-directed health plans (CDHPs), lead people to forgo the medications and healthcare services they need to manage their chronic diseases.
CDHPs are high-deductible health plans that typically include a health savings account (HSA) or health reimbursement arrangement. They usually have lower premiums than other types of health insurance policies.
The IRS rule, which specifically addresses plans with high deductibles and HSAs, lists common services and products that now can be covered before enrollees satisfy their annual deductibles.
The rule effectively allows people to use HSAs, including employer contributions to HSAs, to pay for the treatments. In the past, these funds couldn't be used to treat pre-existing illnesses.
Some of the medications approved by the IRS include beta blockers, selective serotonin reuptake inhibitors, insulin and other glucose lowering agents, inhaled corticosteroids, angiotensin converting enzyme inhibitors and statins. These medications treat common chronic diseases such as diabetes, depression, asthma, congestive heart failure and coronary artery disease.
High deductible plans — either with or without HSAs — are popular. As of 2017, 43% of adults with employer-based coverage were enrolled in a high-deductible health plan, according to the Centers for Disease Control and Prevention.
The theory behind these plans is that the high deductibles lead people to become savvier healthcare shoppers because the money to pay for products and services comes out of their own pockets.
But recent research suggests the plans have a significant downside. For example, a study from the Health Care Cost Institute showed that people enrolled in CDHPs spend less on healthcare and use fewer services than their peers in other types of plans.
This was true even for people with chronic conditions. People in CDHPs spent 3% less on hypertension care and 10% less for Type 2 diabetes compared with their peers in other plans. The study also found lower service use among those with chronic conditions.
The six leading chronic diseases cost more than $1 trillion annually through hospitalizations, prescription medications, medical devices and home care, according to Fitch Solutions, a division of New York City-based Fitch Group, which also runs credit rating agency Fitch Ratings.