The Consolidated Appropriations Act of 2022, signed by President Biden on March 15, includes a temporary, limited extension of the HSA-Telemedicine compatibility provision that was part of the CARES Act.
As a reminder, to be HSA-eligible, an individual must be covered by a qualifying high deductible health plan (with limited exceptions for preventive care and other permitted benefits coverage). When a telemedicine program is available to individuals who are HSA-eligible, then HSA plan compatibility must be considered. Generally, full scope telemedicine services provided before the HSA minimum statutory deductible would cause an individual to be HSA-ineligible.
In response to the COVID-19 pandemic, in 2020 the IRS issued a notice providing that coronavirus testing and treatment, including telehealth services, would not jeopardize HSA eligibility even if provided prior to satisfaction of the minimum statutory deductible. In addition, as per the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted on March 27, 2020, an HSA-compatible HDHP could generally reimburse all telemedicine services, not just those limited to COVID-19 testing, prior to satisfaction of the minimum statutory deductible without jeopardizing HSA eligibility. This applied to plan years before the 2022 plan year.
The Consolidated Appropriations Act (CAA) of 2022 allows telemedicine to be provided prior to meeting the minimum statutory deductible. The law allows first dollar coverage of telemedicine services - but only for April 1 through December 31, 2022.
For a calendar year plan, this leaves a gap from January through March during which full scope telemedicine services provided prior to satisfaction of the minimum statutory deductible would cause an individual to become HSA-ineligible. Separate consideration must be made for non-calendar year plan years.
Employers are not required to adopt this permissive provision. Those who may want to adopt this provision will want to consider the complexity of implementing this limited relief, including the communication necessary to explain the first dollar coverage of telemedicine only for the months April through December 2022. An employer wanting to adopt this relief will need to work with the insurer for insured plans and with the third-party administrator for self-funded plans to determine how this can be implemented. Further, for plans subject to ERISA, a summary of material modification would need to be provided.
Given the popularity of telemedicine services, many had hoped and still hope that more permanent relief will be made available. In the meantime, we only have this temporary relief.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.