Budget Package Includes Insulin Help for HSA Users

What You Need to Know

The HSA insulin safe harbor would take effect for plan years beginning after Dec. 31, 2022.
For those with diabetes, the provision could turn an HSA into a more practical vehicle for saving money for future health care expenses.

The Inflation Reduction Act budget package — H.R. 5376 — could help clients with diabetes who want to use health savings accounts.

Today, HSA users must combine their accounts with high-deductible health insurance policies that meet HSA program requirements. For a client who uses insulin to control diabetes, that could mean using most or all of the cash contributed to the HSA to pay for insulin.

H.R. 5376 would let an HSA-compatible health insurance policy cover insulin before the patient has met the policy deductible.

The HSA insulin provision appears in Section 11408, on page 238 of the PDF file version of the package now posted on the House Rules Committee website.

What It Means

For clients with diabetes, the H.R. 5376 provision could turn an HSA into a more practical vehicle for saving money for future health care expenses, including post-retirement health care and long-term care expenses.

Legislative Details

Section 11408 is similar to Section 401 in H.R. 19, the House version of the Lower Costs, More Cures Act of 2021 bill. That bill was introduced by Rep. Cathy McMorris Rodgers, R-Wash., and has 132 Republican cosponsors.

A companion bill in the Senate, S. 2164, was introduced by Sen. Mike Crapo, R-Idaho, and has seven Republican cosponsors. The HSA benefits provision in Section 301 of S. 2164 is broader and would apply both to insulin and to other treatments for chronic conditions.

The Provision

Section 11408 would help HSA-compatible health insurance policies improve insulin benefits by creating a “safe harbor for absence of deductible for insulin.”

The provision would change Section 223(c) of the Internal Revenue Code to allow pre-deductible coverage for “selected insulin products.”

The provision defines “selected insulin products to mean “any dosage form (such as vial, pump, or inhaler dosage forms) of any different type (such as rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed) of insulin.”

The safe harbor would take effect for plan years beginning after Dec. 31, 2022.

The safe harbor would not require an HSA-compatible health insurance policy to provide pre-deductible insulin coverage. An insurer could decide for itself whether to use the safe harbor.