Temporary Telehealth HSA Coverage Extended
On March 15, 2022, President Biden signed the $1.5 trillion omnibus spending package known as the Consolidated Appropriations Act, 2022 (CAA 2022). Included in the bill is a provision that temporarily reinstates health savings account (HSA) relief, which allows high deductible health plans (HDHPs) to waive the deductible for telehealth and other remote care services, regardless of the plan year and without causing plan participants to lose HSA eligibility. The provision allows the deductible to be disregarded for the period April 1, 2022, through December 31, 2022.
Previously, the Coronavirus Aid, Relief, and Economic Security (CARES) Act amended the same provision to temporarily cover telehealth and remote care services without meeting the deductible for the period after January 1, 2020, for plan years beginning on or before December 31, 2021.
While the provision in CAA 2022 allows additional temporary flexibility for HSA owners to cover telehealth expenses from their accounts before meeting deductibles, due to the timing of the expiration of the CARES Act relief and the extension provided in the legislation, telehealth services for the period January 1, 2022, through March 31, 2022, are subject to the HDHP deductible requirements before they would be considered a qualified medical expense for HSA purposes.
Some key points about the extension:
- Telehealth services do not need to be preventative or related to COVID-19 to qualify for the relief;
- An employer is not required to offer these restored CARES Act exceptions;
- Under CAA 2022, the relief applies “in the case of months beginning after March 31, 2022, and before January 1, 2023”; and
- This relief applies on a monthly basis as opposed to a plan year basis. Consequently, for non-calendar year plans, the HDHP will need to make a midyear change on or after January 1, 2023 to make applicable telehealth visits subject to the Code’s minimum deductible requirements.
If offering the temporary flexibility, employers will be required to:
- Determine whether their plans can and should apply the minimum deductible to telehealth and other remote care services on a retroactive basis during the gap period;
- Clearly communicate all changes to their employees as the relief provided can be confusing (e.g., for some plans, including calendar year plans, the relief will not apply for the months of January through March, and non-calendar year plans will not be able to offer this relief for months after December 31, 2022);
- Update plan documents to explain adopted changes;
- Confirm for fully insured plans whether their insurer will be permitting this relief; and
- Work with their third-party administrator for self-funded plans to see if their systems are able to accommodate these changes.