Congress recently passed and President Biden signed into law a $1.7 trillion governmental funding package (the 2023 CAA) that includes a provision to again temporarily allow plan sponsors that offer high deductible health plans (“HDHPs”) to provide first-dollar telehealth and other remote care services (waive the deductible) for plan years beginning after 12/31/22 and before 1/1/25, without causing participants to lose health savings account (“HSA”) eligibility. This Update is of interest to plan sponsors with HDHPs who may want to take advantage of this optional relief. The details are herein.
Telehealth HSA/HDHP – General Rule
For an individual to be eligible to make or receive contributions to an HSA, the individual must be covered by an HSA-qualified HDHP. Typically, this type of HDHP cannot pay for covered services, except for specified preventive care, until the participant meets the plan’s deductible. Coverage provided under the HDHP before the minimum deductible is satisfied would make plan participants ineligible to make or receive HSA contributions, and failure to follow the rules could result in a portion of an employees’ HSA contributions being subject to income taxes and penalties. Therefore, under the general rules, a telehealth program is not compatible with an HSA unless the HDHP charges a fair market value (FMV) fee each time a participant uses the telehealth service until the minimum deductible required for the qualifying HDHP is met.
Temporary Relief Granted
Temporary relief from this requirement was provided in 2021 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and then extended through 12/31/22 in the 2022 Consolidated Appropriations Act (CAA). Now the 2023 CAA has further extended this temporary relief permitting employees with HSAs to participate in a calendar year telehealth plan with no cost-sharing and remain HSA eligible for the 2023 and 2024 calendar plan years. For non-calendar year plans, there will be a gap in the relief starting 1/1/23 as the new relief in CAA 2023 does not begin until the start of the 2023 plan year. Below is a history of the relief granted over the last few years:
The relief provisions are optional, so it is left to each plan sponsor with an HDHP to determine whether to adopt the deductible waiver for telehealth (fully insured carriers will make the determination and self-insured plan sponsors must coordinate with their TPA/stop-loss provider in order to implement the plan design changes as deemed appropriate). Note too that if the IRS fails to issue guidance closing the non-calendar year plan gap, employers may also want to consider charging FMV fees on their telehealth programs for the 2023 gap period.
Conner Strong & Buckelew will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.