The IRS recently released updated guidance through Notices 2024-71 and 2024-75, broadening the scope of eligible medical expenses and preventive care under high-deductible health plans (“HDHPs”). This includes certain contraceptive expenses now qualifying as pre-tax medical care and an expanded list of HDHP preventive services that can be covered before meeting the deductible.
Key Compliance Updates:
- Condoms are now recognized as eligible expenses for reimbursement through health FSAs, HRAs, and HSAs.
- HDHPs can now cover over-the-counter oral contraceptives, including emergency contraceptives and male condoms, as preventive care prior to meeting the deductible.
Details on the New Guidance
Eligible Expenses under FSAs, HRAs, and HSAs: Under Section 213(d), expenses for medical care—including diagnosis, treatment, and certain preventive measures—are eligible for reimbursement through health flexible spending accounts (“FSAs”), health reimbursement arrangements (“HRAs”), and health savings accounts (“HSAs”). According to Notice 2024-71, condoms are now specifically included as reimbursable medical expenses.
Preventive Care Coverage in HDHPs
Typically, HDHPs require the minimum deductible to be met before benefits apply, except for preventive care. Notice 2024-75 allows HDHPs to cover certain contraceptives (including over-the-counter and emergency options) and condoms before the deductible is met, effective for plan years beginning on or after December 30, 2022. These updates do not affect HSA eligibility.
The notice also confirms:
- All forms of breast cancer screening for individuals without a breast cancer diagnosis are now preventive care.
- Continuous glucose monitors are preventive care for individuals with diabetes.
- Certain insulin products qualify as preventive care, regardless of whether they are for diabetes treatment or prevention of related complications.
Employer Considerations
Employers should consider:
- Informing employees of these changes if offering an FSA, HRA, or HSA, and consulting with their Section 125/cafeteria plan vendor to update plan documents if necessary.
- Coordinating with insurance carriers or third-party administrators to ensure HDHP plans incorporate these changes without impacting deductibles.
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