Medcom Blog


2022 Inflation Reduction Act Introduces New HDHP Insulin Safe Harbor

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA) into law. Its purpose is to "lower families' costs, combat the climate crisis, reduce the deficit, and finally ask the largest corporations to pay their fair share." One noteworthy provision of this act is the expansion of insulin coverage under high deductible health plans (HDHP), effective on or after December 31, 2022. The IRA provides a safe harbor that permits plans not to lose their HDHP status because the plan covers certain insulin products before the individual meets their deductible.

In a press release from The White House, the administration also stated that "3.3 million Medicare beneficiaries with diabetes will benefit from a guarantee that their insulin costs are capped at $35 for a month's supply". This is a huge step for the government toward more affordable healthcare, considering the cost of insulin can typically range anywhere from $334 up to $1,000 a month! A pretty hefty price to pay for a life-saving drug.glucose test on top of coins

Before the IRA was put into effect, to contribute to a Health Savings Account (HSA), a participant must be covered by an HDHP. An HDHP is a health insurance plan that generally cannot provide any coverage until the plan's deductible is met. However, there is an exception or "safe harbor" for preventative care coverage. IRS Notice 2019-45 described preventive care for chronic health conditions that can be covered prior to the HDHP deductible without adversely affecting HSA eligibility—including insulin for those diagnosed with diabetes.

The IRA expands on IRS Code Section 223(c) by allowing an HDHP to cover "selected insulin products" before the deductible is met, regardless of whether the individual has been diagnosed with diabetes. "Selected insulin products" is defined as any dosage form (including vial, pump, or inhaler) of any type of insulin (rapid-acting, short-acting, intermediate-acting, long-acting, ultra long-acting, and premixed).

For a list of eligible expenses, visit the HSA Store.

To learn more about our consumer-driven health plans, including HSAs, visit our solutions page!