Departments Adopt Non-Enforcement Policy on Drug Manufacturers’ Coupons
The Departments have determined that HHS will address the interplay between manufacturers’ coupons and out-of-pocket limits in future guidance.
OverviewIn its 2020 Notice of Benefit and Payment Parameters (2020 NBPP), HHS stated that drug manufacturers’ support to plan participants—in the form of discounts or coupons—“[is] not required to be counted” toward the cost-sharing limit of participants when a generic version is not available. Due to the strong negative inference in the rule (i.e., that coupons should count toward the participant’s out-of-pocket limit if a generic version is not available), the Departments received requests for clarification on whether group health plans and insurers are required to count the coupon or discount toward the annual cost-sharing with plan participants if a generic equivalent is not available. If read to require a manufacturer’s coupon to count toward the out-of-pocket limit, the most significant complication with the HHS rule is that it could disrupt Health Savings Account (HSA) eligibility for individuals who participate in a High Deductible Health Plan (HDHP). If the drug discounts were to apply before the individual satisfies his or her deductible, it could impact eligibility to contribute to an HSA. In fact, under Q/A-9 of IRS Notice 2004-50, discounts for drugs or coupons from The issue arises due to the possible conflict between the 2020 NBPP and IRS Notice 2004-50. If a group health plan is required to count drug coupons or discounts towards out-of-pocket limits, the plan would no longer be HSA-qualified because it would not comply with the requirement under Notice 2004-50 to disregard drug discounts and other manufacturers’ and providers’ discounts in determining if the minimum deductible for an HDHP has been satisfied and only allow amounts actually paid by the individual to be taken into account for that purpose.
Non-Enforcement PolicyDue to the potential impact on HSA eligibility and conflict between NBPP 2020 and the IRS Notice, the Departments have concluded that further rulemaking surrounding this issue must occur before enforcement can begin. HHS has decided to undertake the rulemaking in the NBPP for 2021 that will be released next year. Until this rulemaking occurs, the Departments will not initiate enforcement action against group health plans or issuers who exclude the value of drug coupons or discounts from the out-of-pocket limit, including in circumstances in which there is no medically appropriate generic equivalent available.
Impact on Employers
Until further guidance is issued, employers, plan sponsors and health insurance issuers may continue to exclude the value of prescription drug manufacturer coupons from participant cost-sharing under the ACA’s out-of-pocket limit rules, regardless of whether a medically appropriate generic equivalent is available. In 2019, HHS released the proposed 2020 NBPP in January and the final 2020 NBPP in April. A similar schedule is likely to be followed in 2020 for the 2021 NBPP.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the context is intended as a general overview of the subject matter covered. This agency and Marathas Barrow & Weatherhead LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal services.
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Rule Clarification Saves Health Savings Accounts from a Serious Issue
08.29.2019
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