IRS Expands Tax Breaks for Breast Cancer Screenings, Contraceptives

Over-the-counter birth control and some key health screenings are now deductible as a preventive medical care benefit under high-deductible healthcare plans (HDHPs).

New guidance issued by the IRS and U.S. Treasury Department added male condoms, emergency contraceptives, and over-the-counter birth control pills as items that are eligible for reimbursement under preventive care.

Breast cancer screenings and some glucose monitors are included as well.

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The benefits cover high-deductible health plans, which taxpayers generally pair with a health savings account (HSA).

Here’s what you can claim under the new preventive care guidance and more of what you need to know.

IRS expands preventive care benefits

The IRS rules expand the list of exemptions for male condoms, over-the-counter and emergency contraceptives, continuous glucose monitors, and breast cancer screenings.

Note: The purchase must be considered a medical expense and is deductible regardless of whether they were purchased with a prescription or the individual’s gender.

The agency also clarified what services or purchases qualify under preventive care. For example:

• Breast cancer screenings are treated as preventive care for individuals who have not been diagnosed with breast cancer. Screenings may include, but are not limited to mammograms, MRIs, ultrasounds, and similar screening services or exams.
• Continuous glucose monitors for individuals are generally treated as preventive care for persons diagnosed with diabetes. Some glucose monitors with additional medical functions such as insulin delivery, may be treated as preventive care expenses.

However, suppose a device offers additional medical or non-medical functions that aren’t preventive care (other than minor functions like a clock or date function).

In that case, it may not be eligible for reimbursement before you reach your deductible limit.

• As for oral contraceptives, the new guidance includes Food and Drug Administration (FDA) approved medicines such as progestin-only daily oral contraceptives and emergency contraceptives (levonorgestrel). They also no longer contain the “as prescribed” restriction they formerly did.
• Male condoms are deductible with or without a prescription. Previous guidelines only included female condoms, however, this contraceptive can now be purchased regardless of gender.

When will these benefits be available?

The benefits are effective immediately due to their retroactive effective dates.

• The effective date for selected insulin products is December 31, 2022.
• Over-the-counter oral contraceptives and condoms have been effective for plan years beginning on or after December 30, 2022.
• The effective date for continuous glucose monitors is July 17, 2019.
• The effective date for breast cancer screenings is April 12, 2004.

How to claim your benefits

If you have an HDHP or health savings accounts plan and think you may be eligible for a tax deduction or reimbursement for any preventive care services or items mentioned above, you can discuss this with your healthcare provider.

A high-deductible health plan requires you to pay out-of-pocket medical expenses until your deductible is met (excluding preventive care services). As mentioned, HSA plans may be compatible with your HDHP.

If you were to tap into your cash to pay for preventive services, your doctor or health insurance provider may advise you to keep track of your expenses so you claim them as an itemized medical deduction on your HSA plan. Just make sure of the following:

• The expense is a medical service, and eligible under preventive care.
• You have legitimate documents to prove the need for the item or health service, such as a prescription if required.
• You aren’t "double-dipping," meaning you aren’t claiming a service or item already paid for by your respective HDHP or HSA plan.

Lastly, if you’re ever in doubt, don’t forget you can always ask your Human Resources team about your healthcare benefits and how to access them.

Related Content:

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