Prescription drug discounts and HDHP deductibles: What employers need to know about HSA eligibility

Question: Do prescription drug discounts provided by employers or manufacturer assistance programs affect the Health Savings Account (HSA) eligibility of high-deductible health plan (HDHP) participants?

Short answer: Discounts and manufacturer assistance generally don't prevent an HDHP participant from being HSA-eligible. Participants may take advantage of the reduced cost of prescription drugs, but the plan may not count any portion of the discount or assistance toward satisfying the minimum HDHP deductible.

HSA eligibility requirements: HDHP coverage and no disqualifying coverage

Among other requirements, HSA-eligible individuals must be covered by an HDHP within the meaning of Internal Revenue Code Section 223(c)(2), and they can't have any other disqualifying health coverage that isn't HSA-compatible.

For more details:

• The HSA Eligibility Requirements: Part I
• The HSA Eligibility Requirements: Part II
• Go All the Way With HSA Guide

HDHPs must impose a deductible that's no lower than the applicable annual minimum ($1,700 for employee-only coverage and $3,400 for family coverage in 2026). If the plan pays non-preventive benefits before the participant satisfies the statutory minimum deductible, the plan may fail to qualify as an HDHP. Furthermore, coverage under another arrangement that pays non-preventive medical expenses before that deductible is satisfied may constitute disqualifying coverage. Employees with disqualifying coverage can still participate in the HDHP, but they can't make or receive HSA contributions.

Prescription drug discount cards provided by employers: Not disqualifying coverage

IRS guidance confirms that employer-provided prescription drug discount cards don't constitute disqualifying coverage for HSA eligibility purposes even where the employer pays a fixed annual fee to make the arrangement available to employees. The IRS treats access to the discount card similarly to access to negotiated managed-care rates. As long as the employee is required to pay the cost for the drugs (reduced by the discount) until the minimum HDHP deductible is satisfied, and the amount of the discount doesn't count toward that deductible, the employee remains HSA-eligible.

The key distinction in this scenario is that the discount card doesn't pay the pharmacy for the prescription or reimburse the employee for any part of the payment. The employee is still required to pay 100% of the discounted price prior to satisfying the deductible. Discounted prescription drug costs in this context are like the employer negotiating with providers or third-party administrators for reduced network rates more broadly. Neither approach affects HSA eligibility.

Although an employer-paid discount card reduces prescription drug prices, the IRS distinguishes that arrangement from health plan coverage that pays or reimburses claims. The key distinction is that the arrangement establishes a discounted market price rather than paying or reimbursing a participant’s medical expenses. Accordingly, the drug discount card arrangement is best understood as a pricing mechanism instead of a form of disqualifying medical coverage for HSA eligibility purposes.

Example 1:

• Cyrus is an engineer for Atlantic Railway who is enrolled in the company’s HDHP.
• Atlantic Railway pays a fixed annual fee for all employees enrolled in its group health plan to receive a prescription drug discount card.
• The discounts range from 15% to 50% off the standard market rate for various covered drugs, and there's no dollar cap on the total discounts received during the year.
• Cyrus uses the discount card to buy a GLP-1 drug at 50% off the usual and customary cost multiple times throughout the year.
• He's responsible for paying the cost of the GLP-1 drug (after the 50% discount) until satisfying the deductible.

Result 1:

• The prescription drug discount card paid for by Atlantic Railway doesn't block Cyrus’s HSA eligibility.
• The IRS views the discount card arrangement as access to negotiated rates rather than a form of disqualifying coverage.

Manufacturer copay assistance: Not disqualifying coverage by itself

Prescription drug manufacturers offer cost-sharing assistance in several forms, including coupons, copay cards and patient assistance programs. These programs vary in design and may provide reduced pricing, direct financial assistance, or free or subsidized products for certain drugs manufactured by the pharmaceutical company.

Health plans may coordinate with the reduced costs from manufacturer assistance programs in ways that primarily benefit the patient (i.e., the employee or dependent) or the plan (i.e., the insurance carrier or employer). The Journal of Managed Care and Special Pharmacy published a useful primer explaining these copay accumulator and copay maximizer types of arrangements.

The issue for these types of drug manufacturer financial support programs is how they interact with an HDHP deductible to preserve participants’ HSA eligibility. IRS guidance in a 2021 information letter expresses the view that this type of third-party assistance is compatible with HSA eligibility in the same manner as an employer-paid discount card described above. The key point remains that the minimum HDHP deductible must be satisfied only by actual medical expenses incurred by the covered individual. The HDHP can't credit any form of manufacturer assistance toward the minimum HDHP deductible.

Example 2:

• Gideon is a reporter for a New York newspaper who is enrolled in the company’s HDHP with a $5,000 deductible.
• His doctor prescribes an expensive brand-name drug for arthritis. The manufacturer offers copay assistance through a discount card, and Gideon’s HDHP uses a copay accumulator design under which the assistance isn't credited toward the deductible.
• Under the program, the pharmaceutical company offers participants a discount card (referred to as a copay card) that provides a 40% discount for up to $3,000 in assistance for the drug.
• Over the course of the year, Gideon incurs $8,000 in arthritis drug expenses before the application of the discounts.

Result 2:

• Gideon pays $5,000 of the $8,000 in expenses incurred for the drug after application of the $3,000 discount.
• He satisfies the deductible only through the $5,000 he actually spent on the drug.
• Gideon is HSA-eligible because the HDHP doesn't credit toward the deductible any of the $3,000 in manufacturer discounts received through the copay accumulator program.

Crediting manufacturer assistance to deductible: HSA compatibility issues

A health plan may use a non-accumulator design — sometimes described as a traditional approach — under which manufacturer assistance such as a copay card is credited toward the participant’s deductible and out-of-pocket maximum. This can be an issue in employer plan design strategies for manufacturer assistance, and certain states have enacted insurance mandates requiring some or all manufacturer assistance to be credited to the deductible or out-of-pocket maximum under fully insured coverage. Any such design should be reviewed for HSA compatibility. An HDHP may fail the minimum-deductible requirement if it credits manufacturer assistance in a manner that causes the plan to pay non-preventive prescription drug expenses prior to satisfying the minimum statutory deductible.

Example 3:

• Jack is a merchant mariner for Union Goods, Inc. who is enrolled in family coverage under the company’s 2026 health plan option with a $5,000 deductible and $5,000 out-of-pocket maximum. The 2026 statutory minimum HDHP deductible for family coverage is $3,400.
• His doctor prescribes an expensive brand-name biologic drug for asthma, and the manufacturer offers a discount program referred to as a copay assistance program.
• Under the program, the pharmaceutical company offers participants a discount card (referred to as a copay card) that provides a discount equal to 40% of the drug’s total cost, subject to a $3,000 assistance cap.
• The health plan uses a traditional design without an accumulator adjustment, under which manufacturer assistance is credited toward the $5,000 deductible and out-of-pocket maximum.
• Over the course of the year, Jack incurs $8,000 of expenses for the asthma drug before the application of the discount.

Result 3:

• Manufacturer assistance reduces Jack’s $8,000 drug cost by $3,000. The plan credits that $3,000 toward the $5,000 deductible, leaving Jack responsible for $2,000.
• After Jack pays $2,000, the plan treats the combined $5,000 in participant and manufacturer payments as satisfying both the deductible and out-of-pocket maximum.
• The plan doesn't meet HDHP requirements because it pays for the drug costs prior to satisfaction of the minimum statutory deductible.
• Jack’s example illustrates the plan’s failure to satisfy HDHP requirements because the plan begins paying his drug expenses after Jack has incurred only $2,000 in net medical expenses — less than the $3,400 statutory minimum deductible.
• Therefore, the coverage doesn't qualify as an HDHP, and the individuals enrolled (including Jack) aren't HSA-eligible.

ACA treatment of manufacturer assistance

The Affordable Care Act (ACA) sets cost-sharing limits on how much participants can be required to pay out-of-pocket for covered expenses each year. A key issue in a series of Department of Health and Human Services (HHS) rulemakings has been whether drug manufacturer assistance counts toward those cost-sharing limits. A 2020 HHS rule was interpreted by some to require the application of manufacturer discounts toward cost-sharing amounts (including the deductible) where there was no medically appropriate generic equivalent available. In response to feedback that this approach jeopardized the viability of HSA-compatible HDHP coverage, the subsequent 2021 HHS rule allowed more flexibility to determine if and how to factor in direct drug manufacturer support amounts toward the annual limitation on cost sharing.

These HHS rulemakings were challenged in federal court, and the resulting 2023 court decision vacated the 2021 HHS rule as arbitrary and capricious. The court acknowledged the rules aren't fully clear and that there are interpretative depths to this regulation that have yet to be plumbed. In a subsequent court order, the court explained that the result of its decision was to reinstate the rules previously in force, which had the effect of reinstating the prior 2020 HHS rule.

As of August 2026, the status of manufacturer assistance under the ACA cost-sharing rules remains somewhat unclear. Given the potential HSA-compatibility issues with the reinstated 2020 HHS rule, the departments have expressed their intent not to enforce the more restrictive interpretation that could require application of the manufacturer assistance toward the deductible in some situations. The court order explicitly doesn't rule on the legality of any nonenforcement policy, leaving it unclear whether the current nonenforcement approach could still be challenged. Although there's still technical ambiguity in this ACA cost-sharing area, health plans may continue to exclude manufacturer assistance from the minimum HDHP deductible in reliance on the departments’ stated nonenforcement position.

Protecting HSA eligibility in your plan design

Employer discount cards and manufacturer assistance programs are an increasingly common way to alleviate the high cost of care, particularly with respect to prescription drugs. Employers should be mindful when structuring these discount and assistance arrangements and in their health plan design to ensure that the amount of the reduction doesn't count toward the minimum HDHP deductible. The plan design may affect employees’ HSA eligibility if any amount beyond the actual cost paid by employees (reduced by the drug discount/assistance) counts toward the plan’s deductible.