Congress recently passed a $1.5 trillion governmental funding package that included a provision to permit employers and plan sponsors that offer high deductible health plans (HDHPs) to provide first-dollar telehealth and other remote care services (waive the deductible) for the period from April 1, 2022 through December 31, 2022, without causing participants to lose health savings account (HSA) eligibility. This extension is of interest to employers and plan sponsors with HDHPs who may want to take advantage of this optional relief.
Background: General Rules and Short-term Extensions Under the general rules, for an individual to be eligible to make or receive contributions to an HSA, the individual must be covered by an HDHP. Typically, this type of HSA-qualified HDHP cannot pay for covered services, except for specified preventive care, until the participant meets the plan’s deductible. Coverage provided under the health plan before the minimum deductible is satisfied would make plan participants ineligible to make or receive HSA contributions. Recent exceptions to the rule are as follows:
The 2020 CARES Act added an exception permitting sponsors of HDHPs to offer telehealth services at no cost to participants, regardless of the plan’s annual deductible, without impacting participant HSA eligibility, for the period from January 1, 2020 through the last day of the plan year beginning in 2021 (e.g., December 31, 2021 for calendar year plans; June 30, 2022 for a plan year that began July 1, 2021).
The Consolidated Appropriations Act of 2022 (signed into law on March 15, 2022) now provides for an extension of the CARES Act provision starting April 1, 2022 and through December 31, 2022. For some plan sponsors adopting this extension, this can leave as much as a three-month gap from January 1 through March 31, 2022 in which the standard deductible will still apply. So, for example:
Calendar year HDHPs will have a three month gap from January 1 through March 31, 2022 in which the standard deductible will still apply. These plans should have ended the deductible waiver for telehealth services as of December 31, 2021. They can now start the deductible waiver for telehealth services received on or after April 1, 2022 and through December 31, 2022.
Non-calendar year HDHPs whose 2021 plan year ended before March 31, 2022 (e.g., March 1, 2021 to February 28, 2022 plan year) will have a gap through March 31, 2022 in which the standard deductible will still apply. These plans should have ended the deductible waiver for telehealth services occurring after the end of the 2021 plan year. They can now start the deductible waiver for telehealth services received on or after April 1, 2022 and through December 31, 2022.
Non-calendar year HDHPs whose 2021 plan year ended on or after March 31, 2022 (e.g., May 1, 2021 to April 30, 2022 plan year) will have no gap from January 1 through March 31, 2022 because the original CARES Act waiver of the deductible for telehealth services can now continue until no later than December 31, 2022.
Next Steps The CARES Act and CAA 2022 relief provisions are optional, so it is left to each employer and plan sponsor with an HDHP to determine whether to extend the deductible waiver for telehealth and other remote care. Insurance carriers will make the determination under a fully insured plan as to whether they will adopt the extension. Self-insured plan sponsors must coordinate with their TPA/stop-loss provider in order to implement the plan design change as deemed appropriate for a portion of the year.
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