Legal conflicts have arisen between state-level laws on health plan cost-sharing and federal high-deductible health plan and HSA requirements. As states continue passing legislation to prohibit the use of copay accumulator adjustment programs, they may be putting health plan enrollees in a bind.

Many prescription drug manufacturers offer various forms of financial assistance to patients to reduce their out-of-pocket costs, mainly for the most expensive drugs. These are known as copay accumulator programs, and they exclude this assistance from counting toward a health plan enrollee’s annual cost-sharing limit. It also does not generally count as money spent by an enrollee towards their out-of-pocket maximum. However, in an effort to assist consumers with these costs, some states have passed laws requiring the amount of financial assistance count towards a participant’s cost-sharing, effectively prohibiting these accumulator adjustment programs as they are currently defined. Arizona, Arkansas, Connecticut, Georgia, Illinois, Kentucky, Louisiana, Oklahoma, Tennessee, Virginia, and West Virginia have enacted legislation prohibiting copay accumulator programs, with similar legislation pending in several other states.

These state-level accumulator adjustment program laws have inadvertently created conflict with federal regulations regarding qualified high deductible plans and health savings account eligibility, since counting the amount of financial assistance provided towards the minimum statutory deductible is technically considered disqualifying “first dollar coverage.” If a participant receives credit for the financial assistance before satisfying their annual deductible, the participant becomes ineligible to contribute to their HSA. The IRS has granted HSA-enrollees a transition relief period when similar legal conflicts have arisen in the past, but there is no indication yet that they will do the same for this specific situation. While the 2020 Notice of Benefit and Payment Parameters permits states to pass laws to require discount or coupon payment amounts to be applied towards annual cost-sharing limits, there is no mention of HDHPs.

In the Land of Lincoln, for example, law dictates that health plans count third-party payments, financial assistance, discounts, product vouchers, or any other reduction in out-of-pocket expenses for prescription drugs toward all cost-sharing requirements, including the deductible. However, this law directly contradicts federal law which states that any coverage regulated by the state cannot be considered a high-deductible plan. By counting these coupon or voucher amounts towards the deductible, the discount is considered disqualifying “first dollar coverage.” The Illinois Department of Insurance released a bulletin this summer stating that it is conferring with members of the General Assembly about legislation to clarify whether the General Assembly intends to exempt HDHPs from the law.

Over in the Bluegrass State, Senate Bill 45 was passed in March with an implementation date of January 1, 2022. Much like other states, this bill prohibits health plans and pharmacy benefit managers from excluding cost-sharing amounts covered by coupons, discounts, or vouchers when calculating a participant’s total cost sharing. The Kentucky Department of Insurance issued guidance that the provisions only apply to the extent permitted by federal law, therefore noting that the bill cannot apply to HDHPs when paired with an HSA.

As of now, Illinois and Kentucky are the only states to formally acknowledge the legal conflict that has arisen because of legislation regulating accumulator programs. The remainder of the aforementioned states have not issued guidance on the conflict with HDHPs, nor have they passed any new legislation or regulation creating an exemption for HDHPs.