October 22, 2024

On October 17, 2024, the IRS published two notices (Notice 2024-71 and Notice 2024-75) to expand and clarify the list of preventive care benefits that are permitted under an HDHP without a deductible or with a deductible below the applicable minimum deductible for the HDHP.

As background, an HDHP is generally not permitted to provide benefits for any year until the minimum deductible for that year is satisfied. However, Code section 223(c)(2)(C) provides a safe harbor to provide preventive care even before meeting a deductible.

Notices 2024-75 expanded eligible over-the-counter (OTC) preventive care items to include oral contraceptives (including emergency contraceptives) and male condoms, effective for plan years that begin on or after December 30, 2022. Additionally, the notice clarified that:

• All types of breast cancer screening (e.g., Magnetic Resonance Imaging, ultrasounds, and similar breast cancer screening services) for individuals who have not been diagnosed with breast cancer are treated as preventive care under Section 223(c)(2)(C). This change clarifies language in Notice 2004-23 and thus is effective as of the publication date of Notice 2004-23 (April 12, 2004).
• Continuous glucose monitors for individuals diagnosed with diabetes are preventive care under section 223(c)(2)(C) in the same circumstances as other glucometers if the continuous glucose monitor is measuring glucose levels using a similar detection method or mechanism to other glucometers (i.e., piercing the skin). This clarifies guidance in Notice 2019-45 and thus is effective as of the effective date of Notice 2019- 45 (July 17, 2019).
• The new safe harbor for absence of a deductible for certain insulin products in Section 223(c)(2)(G) applies without regard to whether the insulin product is prescribed to treat an individual diagnosed with diabetes or prescribed for the purpose of preventing the exacerbation of diabetes or the development of a secondary condition. This guidance is effective for plan years (in the individual market, policy years) beginning after December 31, 2022.

Notice 2024-71 provides a safe harbor under Section 213 for amounts paid for condoms. Specifically, the notice states that amounts paid for condoms will be treated as amounts paid for medical care under Section 213(d) and thus will be eligible to be paid or reimbursed under a health flexible spending arrangement (health FSA), Archer medical savings account (Archer MSA), health reimbursement arrangement (HRA), or health savings account (HSA). However, if an amount paid for condoms is paid or reimbursed under a health FSA, Archer MSA, HRA, HSA, or any other health plan or otherwise, it is not a deductible expense under Section 213. The term “medical care” means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

The notices provide helpful clarifications and updates for employers and employees. Employers who offer an HDHP, HSA program, HRA or a health FSA, or HRA should review these notices closely, work with their vendors to update applicable systems, and revise plan documents and other employee communications accordingly.

• N-2024-75 (irs.gov)
• N-2024-71 (irs.gov)