Congress Temporarily Reinstates Telemedicine/HSA Eligibility Relief

Introduction

The recently signed Consolidated Appropriations Act, 2022 (Act) includes another twist on telemedicine (sometimes referred to as telehealth) coverage and eligibility for a health savings account (HSA).

The Act provides that telemedicine coverage will again be temporarily disregarded for purposes of HSA eligibility from April 1, 2022 through December 31, 2022.

 

 

What does this on-again, off again, treatment of telemedicine mean?  

First, it confirms that, but for temporary relief provided by Congress, the typical telemedicine service that provides non-preventive coverage with low or no cost-sharing before the minimum high deductible health plan (HDHP) deductible is satisfied, would disqualify an individual from establishing or contributing to an HSA. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided relief for telemedicine, but that relief expired for plan years beginning after December 31, 2021. This new Act provides additional (but temporary) relief from April 1, 2022, through December 31, 2022.

How will this effect participants who are otherwise HSA eligible, but also have disqualifying telemedicine coverage? 

For calendar year plans (i.e., plans beginning on January 1, 2022), participants with telemedicine coverage that has low or no cost-sharing will still be HSA ineligible from January through March of 2022. However, these participants will be HSA eligible from April through December of 2022. This means that a participant who is otherwise HSA eligible for all of 2022 can make a maximum HSA contribution of 9/12ths of their normal HSA annual contribution.

For a non-calendar year plan that began before December 31, 2021, the prior relief will apply to the end of that plan year in 2022, and the new telemedicine/HSA relief will apply for the new plan year beginning this year, but only through December 31, 2022. For example, if a plan began on July 1, 2021, the CARES act telemedicine relief would have expired on June 30, 2022. Now, this relief will apply for the plan year that begins on July 1, 2022, but only through December 31, 2022.

Conclusion

This temporary relief will no longer be available beginning January 1, 2023, regardless of the plan year. It remains to be seen what happens with the interaction of telemedicine and HSA-eligibility.  Employers who offer HSA disqualifying telemedicine coverage will need to monitor developments later in 2022 to determine if plan changes need to be made in 2023 to maintain employee HSA eligibility. Stay tuned!

 

 

 

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.


About Michelle Cammayo

Michelle Cammayo has more than 13 years of Employee Benefits experience specializing in all lines of health and welfare benefits. Today, Michelle works closely with clients and partners to provide guidance in areas of the law including ERISA, HIPAA, COBRA, FMLA and PPACA. She also oversees the Compliance Department at Bolton & Company to ensure we are helping our clients manage and eliminate risk with regards to employee benefit compliance.

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