- On October 22, 2024
Two new IRS notices expand allowances for reimbursement and tax deductions for medical purchases made by individuals with high-deductible health plans (HDHPs).
The IRS recently released two important benefit plan notices. The first, Notice 2024-71, expands the products available for reimbursement under Code 213(d). Code 213 allows these expenses to be paid or reimbursed under an HSA, FSA, Archer MSA, or HRA. If not paid or reimbursed from one of these plans, an individual makes a tax deduction during the tax year if specific requirements are met.
Notice 2024-71 adds condoms to the expenses eligible for reimbursement. The purchase must be considered a medical expense, which the IRS defines as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.” Whether an expense meets that definition depends on the specific facts and circumstances surrounding the purchase.
The second notice, Notice 2024-75, expands the list of preventative care benefits permitted by a high deductible health plan (HDHP). Participants in qualified HDHPs may establish a health savings account (HSA). To remain HSA eligible, a participant cannot receive any benefits during the year until the minimum deductible is met. However, the law provides an exception for preventative care.
What new preventative care products are covered by IRS Notice 2024-75?
Notice 2024-75 expands the list of preventative care by including:
- Over-the-counter oral contraceptives (including emergency contraceptives) and male condoms;
- All types of breast cancer screening for individuals who have not been diagnosed with breast cancer;
- Continuous glucose monitors for individuals diagnosed with diabetes;
- Certain insulin products without regard to whether the insulin product is prescribed to treat an individual diagnosed or prescribed for the purpose of preventing the exacerbation of diabetes or the development of a secondary condition.
Timeline and Action Items for Plan Sponsors
Both notices are essentially effective immediately because of their retroactive effective dates. The guidance on over-the-counter oral contraceptives and condoms is effective for plan years beginning on or after December 30, 2022. The effective date for breast cancer screenings is April 12, 2004. The effective date for continuous glucose monitors is July 17, 2019. Finally, the effective date for selected insulin products is plan years beginning after December 31, 2022.
Employers should consult with their insurance carrier or third-party administrator to confirm that these new preventive care benefits are incorporated into their plan. Note, however, that this new guidance does not treat these services and items as required preventive care with no cost-sharing under the ACA.