On March 5, the IRS published IRS Notice 2018-12 stating that even if a state requires a health insurance policy or arrangement to cover male sterilization or male contraceptives without cost-sharing, such an arrangement is not considered a high-deductible health plan (HDHP) under the Internal Revenue Code Section 223. Consequently, coverage under a plan that does cover male sterilization or male contraceptives without cost-sharing makes an individual ineligible to contribute to a Health Savings Account (HSA).
A transition relief for plans that provide such coverage will be in effect until Jan. 1, 2020 to allow the plans to come into compliance with the Code and to allow states with conflicting laws or regulations to consider changing them.
The IRS knows that several states have recently adopted laws that require certain health insurance policies and arrangements to provide benefits for male sterilization or male contraceptives without cost sharing. As a result, some individuals in those states are participants in insured health plans or other arrangements subject to the state’s insurance laws. However, these plans are not compliant with IRS Code Section 223.
IRS Code Section 223
The IRS regulations state that the two criteria for defining a preventive care benefit under Section 223 do not apply to male sterilization or male contraceptives. This means that under current guidance:
1. Male sterilization and male contraceptive benefits do not constitute preventive services; and
2. A plan that provides male sterilization and male contraceptive benefits without cost sharing or with a deductible lower than required under Section 223, is not an HDHP, even if the coverage is required by a state.
Knowing this could be challenging to implement in a short time, the IRS instituted transition relief until January 1, 2020 for plans that provide such coverage, thus allowing plans and states with conflicting laws to come into compliance.
In addition, during this time, the IRS is providing transition relief for periods before 2020 to individuals who are in, have been, or become participants in or beneficiaries of a health insurance policy or arrangement that provides benefits for male sterilization or male contraceptives without a deductible or with a deductible below the minimum deductible for an HDHP.
After January 1, 2020, if states continue to mandate coverage for male contraception and sterilization at no cost share, residents of such states:
- Would not be considered to have purchased health insurance coverage that qualifies as an HDHP; and
- Would be unable to open and/or have contribution made to their existing HSA.
Self-funded employers may wish to consult with their legal counsel and review their plan coverage to determine if changes should be made by 2020.
For questions please contact your UnitedHealthcare representative.