Does Health Insurance Cover CBD Oil?

Health insurance coverage for cannabidiol (CBD) oil is a common question, as CBD products continue to gain popularity. This article explores the various factors that influence whether health insurance might cover CBD oil, discussing the regulatory landscape and insurance practices.

CBD Oil and Regulatory Framework

CBD oil is derived from hemp, defined by federal law as cannabis containing no more than 0.3% delta-9 tetrahydrocannabinol (THC). The 2018 Farm Bill removed hemp and its derivatives from the Controlled Substances Act, legalizing its production and sale federally. However, this legislation preserved the U.S. Food and Drug Administration (FDA)’s authority over hemp products, including CBD.

The FDA’s stance is a significant factor impacting insurance coverage. With one exception, the FDA has not approved CBD products as drugs, dietary supplements, or food additives. The agency has stated that existing regulatory frameworks for foods and dietary supplements are not appropriate for CBD. This lack of broad FDA approval for most CBD products means they are not typically classified as medications by regulatory bodies.

Health Insurance Coverage Principles

Health insurance plans generally cover treatments and medications deemed “medically necessary” and, for pharmaceuticals, often require FDA approval. Insurance companies typically maintain a formulary, which is a list of prescription drugs and other medical products they cover. For a drug to be included on a formulary, it typically requires FDA approval for specific uses.

Coverage typically requires a prescription from a licensed healthcare provider, ensuring the treatment is part of a recognized medical plan. Unapproved or experimental treatments are generally excluded from coverage. This framework ensures that covered services meet established standards for safety and effectiveness in healthcare.

Specific Considerations for CBD Oil Coverage

Most health insurance plans do not cover over-the-counter or non-prescription CBD oil products. This is primarily because most CBD products lack FDA approval as medications. Without this approval, these products are often viewed by insurers as supplements rather than regulated drugs.

The significant exception to this general rule is Epidiolex, an FDA-approved prescription medication containing a purified form of CBD. Epidiolex is specifically approved for treating seizures associated with Lennox-Gastaut syndrome, Dravet syndrome, and tuberous sclerosis complex in patients one year of age or older. Since Epidiolex is a prescription drug that has met the FDA’s stringent approval standards, it is generally covered by health insurance plans, similar to other prescription medications, assuming medical necessity and inclusion on the plan’s formulary.

Individuals interested in coverage for Epidiolex should confirm with their specific health insurance policy and their healthcare provider regarding eligibility and any specific requirements. For all other CBD products, consumers should anticipate paying for them out-of-pocket. This distinction is due to the difference between a federally regulated, FDA-approved pharmaceutical and the broader, unregulated market of CBD products.

Exploring Payment Options Without Direct Coverage

When health insurance does not cover CBD oil, individuals often explore alternative payment methods. The most common approach is direct out-of-pocket payment, using personal funds for purchases. This allows consumers to choose from the wide array of CBD products available without insurance restrictions.

For certain medical expenses, Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can offer tax advantages by allowing pre-tax contributions to cover eligible healthcare costs. While there is no specific IRS guidance universally making all CBD products eligible, the FDA-approved prescription drug Epidiolex is generally considered an eligible expense if prescribed by a doctor. Some plan administrators may require a medical diagnosis or a letter of medical necessity for specific CBD products to qualify for reimbursement. It is advisable to consult with the specific HSA or FSA administrator for clarity on eligible expenses to avoid potential penalties or tax implications. Additionally, some CBD retailers may offer discount programs or loyalty rewards that can help reduce the overall cost of ongoing purchases.