Background

The telehealth safe harbor for HSA-qualified HDHPs was originally created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). As we discussed in our March 30, 2020 insight, “Impact of CARES Act on Health Plans,” the CARES Act permitted HDHPs to cover telehealth or other remote-care services before the plan’s deductible is met, effective on March 27, 2020 for plan years beginning on or before December 31, 2021.

Legislation enacted in March 2022 extended this flexibility from April 1, 2022 through December 31, 2022. (See our March 22, 2022 insight, “HDHP/HSA Sponsors: Telehealth Services Exemption Extended.”)

The latest extension

The Consolidated Appropriations Act, 2023, generally extends the ability of HDHP plan sponsors to reimburse telehealth services before the deductible is met through plan years beginning before January 1, 2025. Consequently, HDHPs with plan years beginning after December 31, 2022 and before January 1, 2025 may continue coverage of telehealth services before the deductible is satisfied. For calendar year plans, this means the HDHP can cover telehealth services before individuals meet their deductible for the 2023 and 2024 plan years. Because of the manner in which the effective date of the extension was drafted, the extension may apply differently to non-calendar-year plans, so these plan sponsors should review the extension with legal counsel.

Legislative proposals that would have expanded the use of telehealth even further, such as lifting prescribing limitations, were not included in the Consolidated Appropriations Act, 2023.

Implications for sponsors of HDHPs with HSAs

Under existing statutory and regulatory guidance, plans may continue to reimburse HDHP participants for telehealth services for preventive care, dental or vision care, as well as COVID-19 tests or treatment, before the deductible. Plan participants may now receive coverage for telehealth services before meeting their deductible in their HDHP for another two years. These participants can continue to contribute to their HSA because the HDHP will continue to meet the HSA contribution requirements.

Plan sponsors should contact their health plan administrator to determine how they are paying for telehealth services in light of the latest extension. In some cases, plan documents may need to be amended concerning telehealth coverage.

In addition, plan sponsors may need to provide a special communication to plan participants in HPDPs with HSAs about the availability of telehealth benefits.