There is a potential HSA contribution issue for Maryland-based HDHP plans. The issue stems from the MD Contraceptive Equality Act mandating 100% coverage for male sterilization (without applying the deductible), effective January 1, 2018. This new requirement applies to all group and individual policies upon renewal in 2018, except for grandfathered plans and employers with a religious exemption from providing contraceptive coverage.
However, it is uncertain if the MD mandate fits the IRS definition of an HDHP that is compatible with an HSA. Under the IRS rules, no coverage may be provided before the deductible, except for certain types of preventive care. Women’s contraceptive coverage is recognized as allowed preventive care under the ACA. Male sterilization is not specifically recognized.
Keller’s compliance team spoke with an official at the Department of Treasury. The official confirmed that the Treasury is aware of the situation and advised that Maryland is not the only impacted state. The Treasury understands the urgency and plans to issue guidance soon to clarify the definition of preventive care.
If the Treasury does not recognize male sterilization as preventive care, the next option would be to seek an amendment from the MD General Assembly allowing the HDHP deductible to apply to male sterilization. Keller will provide clients with a template letter before the MD General Assembly is back in session in January. With enough pressure from the public, we fully expect that there will be a legislative correction.
We will continue to update you as information becomes available.