Expiration of Telehealth Relief Permitting HSA Eligibility

As of December 21, 2024 “The American Relief Act, 2025” (“the Act”) became law, resulting in avoidance of a federal government shutdown. The Act, which will fund the federal government until March 14, 2025, extends several telehealth relief provisions as they relate to Medicare. In a surprising turn from the original text of the funding bill, the Act did not contain an extension of the relief contained in the 2023 Consolidated Appropriations Act, which permits plan sponsors to offer telehealth plans at no cost alongside a high deductible health plan (HDHP) without impacting HSA eligibility.

For plan years beginning in 2025, a telehealth plan (whether stand-alone or built into a group health plan) is considered disqualifying coverage and will cause a loss of HSA eligibility unless the telehealth plan has a deductible or charges fair market value (FMV) each time participants use the service until the minimum deductible required for a qualifying HDHP is met.

Since the current relief applies to plan years beginning in 2024, non-calendar year plans will lose relief upon renewal in 2025 as opposed to immediately as of 1/1/25.

IMA special note: There’s still hope. Congress could decide to pass legislation which would permanently disregard telehealth when determining HSA eligibility. Alternatively, the IRS could announce a non-enforcement policy of the prohibition on disqualifying other coverage specifically as it applies to telehealth. However, it is unclear whether this will be a priority under the new administration.

IMA Compliance will post any new developments on this topic.

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