Wage Up! HDHPs and male contraceptive coverage

Health insurance is regulated at both the state and federal level, but HSA rules are federal. Let's take a look at how that plays out when it comes to pre-deductible coverage for male contraception.

HHS regulations from the Affordable Care Act require all non-grandfathered health plans to cover a variety of preventive care at no cost, regardless of whether the deductible has been met. The covered preventive care includes:

Services that are rated "A" and "B" by the U.S. Preventive Services Task Force
Immunizations recommended by the Advisory Committee on Immunization Practices
The Health Resources and Services Administration (HRSA) recommendations for women's preventive care and pediatric preventive care.

And in 2013, the IRS clarified that all preventive care mandated under ACA regulations would be considered preventive care under HDHP rules. That allowed HDHPs to be compliant with the ACA — they cover the required preventive care at no cost to the patient, and also meet the guidelines for HSA-qualified plans.

What if states require additional coverage?

States can impose additional insurance regulations that go beyond the ACA's requirements. Though states can't change the rules that apply to HSA-qualified HDHPs since that's managed by the IRS.

Some states have taken action to address an issue that many consider unfair. Under HHS regulations, all types of FDA-approved contraceptives for women have be covered at no cost to the plan enrollee. But FDA-approved contraceptives for men don't have to be covered.

Vermont, Illinois, Maryland, and Oregon have passed laws requiring all state-regulated health plans to cover FDA-approved male contraception (condoms and vasectomies), regardless of whether the deductible has been met. This could result in significant cost-savings, since vasectomies are much less expensive than tubal ligations, which are required to be covered under federal regulations.

But while these state rules were created with good intentions, they put people with HDHP coverage at risk of losing their ability to contribute to their HSAs. That's because the addition of pre-deductible coverage for male contraception makes the plans incompatible with the rules for HSA compliance.

[Note that if the federal government were to mandate no-cost male contraceptive coverage, the plans would still be considered HSA-compliant.]

To address this, the IRS issued transitional relief in the spring of 2018. The IRS has clarified a few points:

Prior to 2020, they'll let people contribute to an HSA if they have a plan that would otherwise be an HDHP, but that covers male contraception as a result of a state mandate.
The IRS does not currently consider male contraception to be a preventive care benefit, so in 2020 and beyond, people whose plans cover male contraception pre-deductible would not be eligible to make HSA contributions.
But the IRS is considering changing the rules to allow pre-deductible coverage of male contraception on HDHPs (you can submit a comment to the IRS about this by adding "Notice 2018-12" in the subject line).

More states might opt to take action on this issue, adding male contraceptive rules. But for the time being, they'll likely exempt HDHPs from the new rules so that people in those states can continue to contribute to HSAs in 2020 and beyond. Maryland has already enacted additional legislation to exempt HDHPs from the new state law mandating no-cost coverage for male contraception.

It's also possible that the IRS could relax their stance on the issue of male contraception and HDHPs. Stay tuned!

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