HSA Eligibility Impacted by Third Party Drug Payments

The Commissioner of Insurance Donelon recently issued Bulletin 2022-01, which provides guidance on SB 94, which was enacted during the 2021 session. SB 94 requires all health insurers to “include any cost-sharing amounts paid by the enrollee or on behalf of the enrollee by another person” when calculating a participant’s deductible and out-of-pocket (OOP) maximum. In the recent bulletin, Commissioner Donelon provided guidance on the type of payments that must be included. For example, a group medical policy must include the amount of a prescription drug discount or third-party payment, such as a drug manufacturer’s payment, toward an individual’s deductible and OOP maximum.

This presents a qualification issue for high deductible health plans (HDHPs). Under federal law, for an HDHP to be qualified and its participants to be eligible for HSA contributions, only actual out-of-pocket amounts paid by the participant may be included in the deductible and OOP maximum. This means that policies issued in Louisiana must comply with the state insurance requirement, which will result in the coverage being disqualified for HSA contributions. The bulletin suggests that the only solution available to Louisiana participants right now is for HDHP participants not to use drug discounts or third-party payments.

The requirement was effective June 2021, so Louisiana insurers must send communication to HDHP participants to explain the issue. Employers should work with insurers and third-party HSA administrators to resolve eligibility issues for any impacted participant. This could include distributing excess HSA contributions for an individual for whom a third-party payment or drug discount went toward their deductible or OOP maximum.

This is a trending issue for employers nationwide as many states have enacted similar laws. We will continue to monitor this issue and report any developments in Compliance Corner.

SB 94 »
Bulletin 2022-01 »