The Consolidated Appropriations Act (CAA), signed in March 2022, included relief that telemedicine coverage would be temporarily disregarded for purposes of HSA eligibility from April 1, 2022, through December 31, 2022.
This relief has not been extended. Beginning January 1, 2023, telemedicine coverage that provides services with 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.
Could the same relief be granted or extended into 2023?
This relief for telemedicine was first granted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and expired for plan years beginning after December 31, 2021.
The CAA, 2022, then provided additional relief from April 1, 2022, through December 31, 2022. It is possible that yet another piece of legislation could provide the same relief, and we will be sure to update our readers if further relief is granted.
How will this affect participants who are otherwise HSA eligible, but also have disqualifying telemedicine coverage?
Regardless of when a plan year began (or will begin), participants with telemedicine coverage that has no or low cost-sharing before the minimum HDHP deductible is met will be HSA-ineligible as of January 1, 2023, and for the foreseeable future.
Note: those HSA participants enrolled in no or low cost-sharing telemedicine after January 1, 2023, will not be eligible to contribute to an HSA until measures are put in place to comply with the HSA deductible rule. This includes employer contributions into an HSA as well.
Unless further relief is signed into law by January 1, 2023, one of the following changes must be made by employers currently offering their HSA enrollees low or no cost sharing telemedicine coverage:
- Participants will need to be given the opportunity to drop the telemedicine coverage by 1/1/23. This option may or may not be possible due to midyear election change rules. Consult with your broker for more details.
- The telemedicine coverage itself must be adjusted to require a participant to pay at least fair market value for services until the minimum HDHP deductible is met. This would ensure that the telemedicine coverage is no longer disqualifying coverage.
- To make changes to telemedicine coverage, employers should contact their broker and/or telemedicine representative to discuss options.
Conclusion
It remains to be seen what will happen in the future with the interaction of telemedicine and HSA-eligibility. For now, employers who offer HSA disqualifying telemedicine coverage will need to make decisions to preserve HSA eligibility for their employees enrolled in a qualifying HDHP plan.
Employers are encouraged to communicate to HSA participants regarding plan changes due to the expiration of this relief.
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