Benefits Buzz

HSAs: An Example of When Federal and State Rules Collide

Posted on December 19th, 2017

The state of Maryland passed a law known as the Contraceptive Equity Act which is scheduled to take effect on January 1, 2018. The law requires fully insured health plans issued in the state of Maryland to cover male sterilization procedures (i.e. vasectomies) as preventive care without any copay, deductible or other cost-sharing requirements for the member. 
Here’s the thing. Federal law does not currently treat male sterilization procedures as preventive care, and federal law is what governs Health Savings Account (HSA) rules. HSA eligibility requires a person to be covered by a qualified high deductible health plan (HDHP), and HDHPs generally cannot provide any coverage or benefit before the deductible, except for that of federally-allowable preventive care.  
While the Affordable Care Act (ACA) requires female contraception to be covered as preventive care, it does not apply to male contraception. That means as of January 1, 2018, there won’t be any HSA-qualified health plans available in Maryland (unless coverage is self-insured and exempt from state-mandated benefit requirements).
The Maryland Insurance Administration is aware of this issue and has asked the Internal Revenue Service (IRS) to consider male sterilization procedures as preventive care, thus preserving HSA-eligibility. The IRS has yet to respond, and it’s unclear if the IRS has the power to make this determination without a law passed by Congress. This is causing a great deal of concern in Maryland since January 1st is just around the corner. 
It’s believed that a handful of other states are considering mandated coverage for male sterilization procedures similar to that of Maryland. If other states pass a similar law, the same HSA concerns would apply absent further guidance.
Update: The Internal Revenue Service (IRS) has confirmed that health plans which cover male sterilization procedures without any deductible or cost sharing requirements will eliminate HSA-eligibility. However, the IRS is providing transition relief until 2020 considering the situation. Anyone covered by a health plan which covers male sterilization procedures with no cost sharing requirement will remain HSA-eligible until 2020.


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