On December 23, 2022, Congress passed the Consolidated Appropriations Act of 2023 (CAA 2023), which provides government funding for fiscal year 2023, avoiding a federal government shutdown.
Tucked into the more than 4,000 pages of CAA 2023 is a provision impacting group health plan sponsors extending the temporary safe harbor Health Savings Account (HSA) relief for telehealth services previously provided under the CARES Act of 2020 and the Consolidated Appropriations Act of 2022 (CAA 2022). This temporary relief under CAA 2023 is effective from January 1, 2023, until December 31, 2024, for the 2023 and 2024 plan years for those employers with a calendar year plan.
Background
The CARES Act of 2020 created a temporary safe harbor permitting HSA-compatible high deductible health plans (HDHP) to cover telehealth and remote care services on a first-dollar basis, or prior to members satisfying their HDHP deductible. This temporary relief allowed HDHPs to offer telehealth and other remote care services without violating IRS “first-dollar rules,” which require HSA participants to satisfy their deductible before receiving most non-preventive services coverage. This relief under the CARES Act expired on December 31, 2021. The CAA 2022 reinstated the temporary safe harbor for 2022 from April 1, 2022, to December 31, 2022. The CAA 2022 reinstatement meant that non-preventive telehealth services received from January 1, 2022, to March 31, 2022, were still required to satisfy the HDHP deductible to preserve HSA eligibility.
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CAA 2023
The CAA 2023 extends the safe harbor relief allowing HSA-compatible HDHPs to cover telehealth and other remote care services on a pre-deductible basis without jeopardizing an individual’s ability to make or receive HSA contributions. This relief is available under CAA 2023 until December 31, 2024.
Non-calendar year HSA-compatible HDHPs may adopt the CAA 2023 relief once their particular plan year ends in 2023. However, the language in CAA 2023 appears to create a gap in telehealth relief for non-calendar plan years from January 2023 until the month in which the 2023 plan year begins, where non-preventive telehealth services will be subject to the plan’s deductible. We are closely following this concern and will provide an update if any additional guidance is released.
Example: A non-calendar year plan that started on April 1, 2022, and ends on March 31, 2023, will have a gap in the telehealth relief where the HDHP deductible for non-preventive telehealth services will apply from January 1, 2023, to March 31, 2023.
As with the prior legislation, this temporary safe harbor relief is optional. Employers with HSA-compatible HDHPs must decide whether to adopt this temporary relief once again for the 2023 plan year, recognizing the potential cost impact to the plan.
Employers should also consider that adopting this temporary relief for 2023 will likely be a welcome development for those HSA-compatible HDHP participants who continue to value telehealth and remote care coverage.
Employer Decisions and Next Steps
- Employers with fully-insured HDHPs will need to confirm if their insurance carrier will permit this CAA 2023 telehealth relief for 2023.
- Employers with self-funded HDHPs should coordinate with their third-party administrator to decide if they will permit this relief for 2023. When making this decision, employers with self-funded plans are advised to consider the cost impact to the plan.
- Employers are advised to clearly communicate this change to employees and update Summary Plan Descriptions (SPDs) via a Summary of Material Modifications (SMM) notice.
Risk Strategies is committed to keeping employers informed. Reach out to your Risk Strategies representative with any questions or contact us directly at benefits@risk-strategies.com.
