March 31, 2022
On March 15, 2022, President Biden signed the Consolidated Appropriations Act, 2022 into law. The omnibus government funding legislation temporarily renewed and extended a safe harbor for employers that allows high-deductible health plans (HDHPs) with health savings accounts (HSAs) to cover telehealth and other remote care services on a pre-deductible basis. The reinstituted relief also permits otherwise HSA-eligible individuals to receive this pre-deductible coverage outside of the HDHP without jeopardizing the individual’s eligibility to make or receive HSA contributions. Normally, an employee would be ineligible to make and receive contributions to an HSA if an employer’s plan covers costs related to telehealth services before the minimum applicable HDHP deductible is met.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) originally provided this relief to employers, but it expired at the end of 2021 for calendar-year plans. The omnibus legislation temporarily extends the safe harbor from April 1 to December 31, 2022. The extended relief is not retroactive to January 1, 2022, however, resulting in a gap for plan sponsors and participants.
Employers that offer HDHPS with HSAs are not required to reimplement the pre-deductible coverage, but the extension of the safe harbor is available for the period of April 1 to December 31, 2022.
Next Steps
There are multiple considerations for employer plan sponsors that offer HDHPs with HSAs and cover telehealth or remote services.
- For calendar year plans, implementing this relief would occur mid-plan year since the extension does not include a retroactive effective date.
- For off-cycle/non-calendar year plans, the temporary extension would expire mid-plan year, thereby requiring further mid-year adjustments to the plan.
- Employers that continued to offer pre-deductible telehealth coverage in Q1 2022, proactively assuming this relief would apply, should consult with legal and tax counsel to determine the potential administrative and compliance solutions.
Employers should discuss the implications of implementing this extended relief with legal counsel and tax advisors.
Business Group is continuing to advocate for greater telehealth flexibility for employers, who overwhelmingly support permanently allowing telehealth to be covered before the deductible based on responses to Business Group’s 2022 Large Employer’s Health Care Strategy and Plan Design Survey. Business Group is participating in ongoing discussions with Congress and the Biden Administration on potential solutions the Department of the Treasury and Internal Revenue Service (Treasury/IRS) could implement to support employers in extending this coverage. Most recently we requested a period of non-enforcement to bridge the gap between January 1 to March 31, 2022 prior to the April 1, 2022 effective date. We will continue to keep our members informed of these ongoing discussions and potential regulatory solutions.
A discussion of this relief and the implications of the temporary extension for employers in additional detail in our March 2022 webinar.
Resources
- Business Group on Health Webinar: Regulatory & Compliance Update, March 2022
- Business Group on Health: Joint Letter to Senate Leadership Supporting Pre-Deductible Coverage of Telehealth in HDHPs
- Business Group on Health: Joint Letter to Senator Daines (R-MT) and Cortez Masto (D-NV) Supporting the Telehealth Expansion Act of 2021
If you have questions, comments, or concerns about these or other regulatory and compliance issues, please contact us.
We provide this material for informational purposes only; it is not a substitute for legal advice.
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