Congress has passed, and the President has signed, omnibus spending legislation that (among other things) temporarily exempts telehealth and other remote care services from certain restrictions affecting health savings account (HSA) eligibility. By way of background, tax-advantaged contributions generally cannot be made to an HSA unless the account holder is covered by a qualifying high-deductible health plan (HDHP) and does not have disqualifying non-HDHP coverage. In the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (see our Checkpoint article), Congress created exceptions to those rules to facilitate the use of telehealth during the COVID pandemic, but those exceptions applied only to plan years beginning on or before December 31, 2021. The new legislation—the Consolidated Appropriations Act, 2022—restores these exceptions for the last nine months of 2022.
The new legislation amends two key provisions in the Code § 223 rules for HSAs. First, it provides that telehealth and other remote care services will be considered disregarded coverage—and thus will not cause a loss of HSA eligibility—during the months beginning after March 31, 2022, and before January 1, 2023. Second, during that nine-month period, plans may provide coverage for telehealth and other remote care services before the HDHP minimum deductible is satisfied without losing their HDHP status. Both amendments apply to the stated months without regard to the HDHP’s plan year. The relief does not apply for the first three months of 2022 so some plans (e.g., calendar-year plans) must still apply their minimum deductible to telehealth and other remote care services during those months. [EBIA Comment: Plans with 2021 plan years that started on or after April 1, 2021, should be unaffected by the three-month gap that affects other plans, because their CARES Act relief will not expire until those plan years end.]
EBIA Comment: HDHPs are not required to waive their minimum deductible for telehealth and other remote services during the additional relief period, so some plan sponsors may conclude that a midyear change to take advantage of the restored exceptions is too difficult to communicate and administer, and not worth the effort. Other plan sponsors, those who assumed Congress would extend the CARES Act relief without a gap and covered telehealth during the first three months of 2022 without applying the minimum deductible, may have a different problem: determining whether their plans can and should apply the minimum deductible to telehealth and other remote services retroactively to the gap period. Some covered individuals may be able to avoid the adverse HSA-eligibility consequences of their plan’s failure to satisfy the minimum deductible requirement during the first three months of 2022 by using the full contribution rule, which allows a full year’s worth of HSA contributions to be made by someone who is HSA-eligible for only a portion of the year. (This rule is also sometimes referred to as the “last-month rule” or the “no-proration rule.”) But that rule may not be available to all affected plan participants because some may not be HSA-eligible on December 1, 2022, and some may not remain HSA-eligible throughout the 13-month testing period beginning on that date. For more information, see EBIA’s Consumer-Driven Health Care manual at Sections X.I (“Telehealth and Other Remote Care Services”), XI.G.7 (“Certain Telehealth and Other Remote Care Services Will Not Prevent HSA Eligibility”), and XII.B.2 (“Full-Contribution Rule for Midyear HDHP Enrollees”). And don’t miss these upcoming EBIA webinars: “Group Health Plans Quarterly Update: Q1 2022” (live on 3/24/2022), and “Learning the Ropes: An Introduction to HRAs and HSAs” (live on 4/14/2022).
Contributing Editors: EBIA Staff.