High-deductible health plans and generic drugs

For 2026, a health plan has to carry a deductible of at least $1,700 for one person, or $3,400 for a family, to count as a high-deductible health plan under federal tax law, according to IRS Revenue Procedure 2025-19¹. Many plans set the bar higher. In 2025 the average single-coverage deductible in an HSA-qualified plan was $2,578, and 33 percent of workers with employer coverage were enrolled in a high-deductible plan with a savings option, KFF's employer survey² found.

Until that deductible is met, the enrollee usually pays the plan's full negotiated price for each prescription, generics included.

Federal rules allow a few exceptions. In 2019 the IRS widened the list of drugs and services such a plan may cover before the deductible, and a 2025 tax law expanded who can use these plans. For people taking low-cost generics, the order of operations (deductible first, negotiated price or cash price, what counts toward the deductible) can matter as much as the drug's price.

The 2026 limits

Section 223 of the tax code defines a high-deductible health plan, or HDHP, by two numbers that the IRS adjusts for inflation each year: a minimum deductible and a maximum on out-of-pocket costs. Only people covered by a qualifying HDHP, with no other disqualifying coverage, can contribute to a health savings account, according to IRS Publication 969⁴.

Sources: Rev. Proc. 2025-19 for 2026; IRS Notice 2026-5³ and IRS Publication 969⁴ for 2025.

What a plan may cover before the deductible

The statute carves out preventive care, which an HDHP may cover with no deductible. For years the IRS read that narrowly. A 2004 notice said preventive care "generally does not include any service or benefit intended to treat an existing illness, injury, or condition," as IRS Notice 2019-45⁶ recounts.

Notice 2019-45, effective July 17, 2019, followed an executive order signed that June. The Treasury Department and the IRS wrote that cost barriers had led some people with chronic conditions to skip "effective and necessary care," and they added 14 specific items for people already diagnosed with particular conditions.

Notice 2019-45 permits this coverage and does not require it. It says the list does not create preventive care that must be covered without cost sharing under the Affordable Care Act, so each plan or employer decides whether to use it. That ACA no-cost-sharing list is a separate one, covered in Preventive drugs that plans must cover with no cost sharing. KFF found² that 45 percent of covered workers at firms with 50 or more employees were in a plan that reduced or waived cost sharing for drugs used to manage one or more chronic illnesses in 2025.

Later guidance added more. Section 11408 of the Inflation Reduction Act, as the IRS later summarized it⁷, let HDHPs cover selected insulin products before the deductible for plan years beginning after Dec. 31, 2022. IRS Notice 2024-75⁷ added over-the-counter oral contraceptives, including emergency contraceptives, and male condoms, and it said continuous glucose monitors for people with diabetes are generally preventive care.

Where the cheap generics fall

Most drug classes on the 2019 list include old generics with many manufacturers. GxRadar's analysis of CMS NADAC data⁸ through October 2026 puts the pharmacy acquisition cost of 30 tablets of several of them at around a dollar or less.

NADAC excludes dispensing fees and pharmacy margins, so actual prices run higher. The examples show which classes the notice covers; whether any drug applies to a particular person depends on the diagnosis and on the plan's own rules.

During the deductible, an HDHP enrollee generally pays the plan's negotiated rate. For a cheap generic, a pharmacy's cash price or a discount card price can come in lower (see when the cash price beats the copay and how prescription discount cards work). A purchase made outside the plan may not be recorded, though, so it may not count toward the deductible or the out-of-pocket maximum. Only the plan can say how it treats a receipt submitted after the fact, and the member services line is the place to ask.

Either way, an HSA can usually pay. Prescription drugs are qualified medical expenses whether bought through the plan or for cash, a point covered in Using an HSA or FSA for prescriptions. The script in How to ask for the cash price works at the counter for anyone still in the deductible.

What the 2025 tax law changed

A 2025 law known as the One Big Beautiful Bill Act, signed July 4, 2025, made three changes to HSA rules, according to IRS Notice 2026-5³. A telehealth safe harbor first enacted in the 2020 CARES Act⁵ became permanent for plan years beginning after Dec. 31, 2024. Bronze and catastrophic plans sold on the ACA marketplaces are treated as HDHPs for months beginning after Dec. 31, 2025. And enrollment in a direct primary care arrangement costing no more than $150 a month for one person, or $300 for more than one, no longer blocks HSA eligibility.

That last provision has a drug-specific limit. Notice 2026-5 says³ the primary care services in such an arrangement cannot include prescription drugs other than vaccines.

Notice 2019-45⁶ said Treasury and the IRS expected to review the chronic-condition list "approximately every five to ten years." Counting from 2019, that window runs through 2029.