Pre-Deductible Telehealth Coverage Permissible For Two More Years

The Consolidated Appropriations Act, 2023 signed by President Biden on Friday, December 29, 2022 to avoid a government shutdown extends or reinstates the ability of high deductible health plans (HDHPs) to provide benefits for telehealth or other remote care services before plan deductibles have been met without jeopardizing health savings account (HSA) eligibility. This is applicable for plan years beginning in 2023 and 2024. As with prior telehealth relief, this provision is optional; HDHPs can continue to choose to apply any telehealth services toward the deductible.

Background

HSA contribution rules strictly limit the types of health plan coverage that eligible individuals may have. As a general rule, telehealth programs that provide free or reduced-cost medical benefits prior to satisfying the HDHP deductible are disqualifying coverage for purposes of HSA eligibility.

However, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) temporarily allowed HDHPs to provide benefits for telehealth or other remote care services before plan deductibles had been met, without jeopardizing plan participants’ eligibility for HSA contributions. That relief was only applicable to plan years beginning before January 1, 2022, and therefore ended on December 31, 2021 for calendar year plans.

In March 2022 the Consolidated Appropriations Act, 2022 was enacted. This law allowed HDHPs to choose to waive the deductible for any telehealth services incurred from April 1, 2022 through December 31, 2022 (regardless of plan year) without causing participants to lose HSA eligibility.

The Latest Extension

The Consolidated Appropriations Act, 2023 provides that HDHPs with plan years beginning in 2023 and 2024 are permitted, but not required, to waive the deductible for telehealth or other remote care services. For calendar year plans, this will align nicely as the most recent extension would have ended on December 31, 2022 and their 2023 plan year begins on January 1, 2023.

However, for non-calendar year plans, there will be a gap in the relief between January 1, 2023 until the first day of their plan year beginning in 2023 when the latest relief begins. Therefore, under non-calendar year plans, any telehealth services provided between January 1, 2023 and the first day of their 2023 plan must still be counted toward the HDHP deductible to avoid jeopardizing participants’ eligibility for HSA contributions.

More Information

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The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.