Effective 1/1/2018, Maryland's Contraceptive Equity Act requires all health insurance carriers to cover male sterilization (vasectomy) procedures as preventative care, thus excluding these procedures from deductibles.
However, this deductible prohibition is suspended for high deductible health plans (HDHP). Otherwise, insurers and nonprofit health service plans providing coverage for male sterilization under individual, group, or blanket health insurance policies or contracts issued or delivered in Maryland must provide this coverage without a deductible.
Under IRS rules for HDHPs, only preventative care benefits can be provided without a deductible (hence the current exception for HDHPs). Maryland law requires all plans to cover male sterilization as one of the preventative care benefits for HDHPs. The Maryland Insurance Administration is aware of this disconnect and has asked the IRS to treat male sterilization as a preventative benefit.
Organizations actively funding Health Savings Accounts (HSA) in Maryland may be subject to tax penalties if the IRS does not recognize male sterilization as a preventative benefit by 1/1/2018 or soon thereafter.
We will keep you apprised of developments regarding this legislation.
Further detail from CareFirst
The IRS requires that high deductible health plans (HDHP) not cover benefits until the deductible for that year is satisfied. As you know, under current IRS rules for HDHPs, only preventive care benefits can be provided without a deductible. Preventive care includes a variety of screenings and services for adults and children. Food and Drug Administration-approved contraceptive methods, sterilization procedures, and patient education and counseling, as prescribed by a health care provider for women with reproductive capacity also must be covered without a copayment or coinsurance before the deductible is met. Male sterilization is not included in the IRS’ list of preventive services.
The new Maryland law, effective January 1, 2018, creates a conflict with the IRS rules regarding the treatment of male sterilization as a preventive service. This new law impacts CareFirst’s BlueChoice HMO HSA Bronze $6,550 and BluePreferred PPO HSA Bronze $6,550 plans sold in Maryland. Members who have these Plans and who fund HSA may be subject to tax penalties when they file their 2018 taxes – regardless of whether they use the covered benefit (male sterilization) or not. Subscribers and members with Grandfathered plans are not impacted.
The Maryland Insurance Administration is aware of this disconnect and has asked the IRS for clarification as to whether or not they consider male sterilization to be a preventive benefit for the purposes of IRS regulatory guidance.
In the meantime, members who fund an HSA with these plans may be subject to tax penalties if the IRS does not recognize male sterilization as a preventive care benefit.
Members can continue to use their previously-funded HSA account to pay for health care services and should consult with a tax professional if they have further questions.