CAA 2023 Appropriations Bill Restores Telehealth Exemption for HDHPs Through 2024

During the final week of December 2022, Congress approved the Consolidated Appropriations Act, 2023 (CAA 2023) which included, among other provisions affecting employers, a temporary telehealth services safe harbor for High Deductible Health Plans (HDHP) first-dollar coverage without violating Health Savings Account (HSA) contribution rules. As of January 1, 2023, HDHP participants may still take advantage of coverage for telehealth services without losing their eligibility to make HSA contributions and having to first satisfy the minimum required deductible of their HDHP. Although the extension of the safe harbor is still temporary, there remains hope that before the expiration of the new extension in 2024 Congress will make the availability of a telehealth services exception permanent.

Was the Safe Harbor and Extension Necessary?

The CAA 2023 telehealth safe harbor legislation builds further upon earlier extensions legislated in 2020 and 2022 that arose due to the COVID-19 pandemic. Telehealth services gained significant value during the pandemic as usage skyrocketed since they allowed for lower cost remote care and removed the risk of in person infection between healthcare providers and patients. Prior to the introduction of the first safe harbor exception for telehealth services, employees who were participating in a health plan while taking advantage of its telehealth service offerings were ineligible from contributing to an HSA. Absent a specific exception in the Internal Revenue Code (IRC), those plan participants who used telehealth services as part of their health coverage would have to pay the fair market value of the telehealth services before the HDHP deductible was satisfied. These extensions ensure that employees’ ability to make HSA contributions will not be compromised by the offering of telehealth services by their employers.       

How Long Will the Extension Last?

The most recent extension was set to expire on December 31, 2022, which would have required charging health plan participants for telehealth services as of January 1, 2023, if they were enrolled in a HDHP. While the CAA 2023 extension is also not permanent, the new safe harbor and extension in applies to plan years beginning after December 31, 2022, and before January 1, 2025. For calendar year plans, this means that the telehealth relief will expire December 31, 2024, unless extended once again or made permanent in the interim.

What to Do Now

As we noted following the 2022 telehealth extension, the extension of telehealth relief is optional and must first be implemented by the plan sponsor. 

If a plan sponsor opts to implement the relief, they should do the following:

• If fully insured, the plan sponsor should contact their carrier to assist with the adoption of the telehealth relief; once adopted, the plan sponsor should ensure that their plan documents are properly updated and that plan participants are notified.
• If self-funded, the plan sponsor should discuss these changes with their third-party administrator (TPA) and stop-loss carrier; once adopted, the plan sponsor should ensure that their plan documents are properly updated and that plan participants are notified.

Due to the timing associated with this relief, plan sponsors should consider issuing a Summary of Material Modifications (SMM) to alert employees.

Potential Gap Period

Please note that we are aware of the potential issues created by the “gap period” associated with the timing of this guidance/the way that it is written and how that affects non-calendar year HDHP plans. As such, an HDHP that is not running on a calendar year basis will have a gap between January 1, 2023 and when the plan year begins where telehealth generally could not be covered prior to hitting the deductible. Please be mindful of your plan year as you implement any telehealth offerings.

As we noted above, adoption of this safe harbor guidance is optional and not mandatory. Likewise, plan sponsors are not required to provide telehealth coverage to employees.

 

Additional Links

• CAA 2023
• Appropriations Bill Restores Telehealth Exemption for HDHPs for the Remainder of 2022