Just in time to avoid a federal shutdown, Congress has passed a massive $1.7 trillion omnibus government funding bill titled the Consolidated Appropriations Act, 2023 (“CAA 2023”). Included among the more than 4,000 pages is a provision affecting employee benefits.
The CAA 2023 extends for a second time the HSA relief permitting high deductible health plans (“HDHPs”) to provide first-dollar telehealth and other remote care services for plan years beginning after December 31, 2022 and before January 1, 2025 (i.e., the 2023 and 2024 plan years for employers with a calendar plan year). Those telehealth or other remote care services do not need to be preventive or related to Covid to qualify for the relief.
This CAA 2023 HSA relief is an extension of the CARES Act and CAA 2022 provisions, which provided the same telehealth relief for plan years beginning on or before December 31, 2021, and subsequently from April 2022 – December 2022.
The practical effect of the relief is that HDHPs may choose to waive the deductible for any telehealth services through 2024 without causing participants to lose HSA eligibility. The provision is optional—HDHPs are not required to waive the deductible that would otherwise apply to non-preventive telehealth services.
General Rule: HSA Eligibility
The general rule is that an individual must meet two primary requirements to be HSA-eligible (i.e., to be eligible to make or receive HSA contributions):
- Be covered by an HDHP; and
- Have no disqualifying coverage (generally any medical coverage that pays pre-deductible, including Medicare).
HSA eligibility also requires that the individual cannot be claimed as a tax dependent by someone else.
One of the key requirements for all HDHP coverage is that the plan impose at least the statutory minimum deductible prior to paying for covered services. In 2023, the HDHP minimum deductible is $1,500 for single coverage, and $3,000 for family coverage.
The main exception to the HDHP minimum deductible requirement is the ability of an HDHP to provide first-dollar coverage (i.e., not subject to the deductible) for preventive care without affecting HSA eligibility.
For more details on everything HDHP/HSA, see our Newfront Office Hours Webinar: Go All the Way with HSA.
CAA 2023: HSA Telehealth Relief Extended Again Into 2023
With the telehealth relief measures set to expire as of the end of 2022, a long list of prominent industry groups led a lobbying effort requesting that Congress extend the relief into 2023. Their jointly-signed letter to congressional leadership highlighted the benefits of expanded telehealth coverage, particularly in the mental health context. The letter emphasized that “[a]llowing employers and health plans to continue offering these important services pre-deductible improves affordability and expands access.”
There appears to be significant bipartisan support for the relief, as the efforts were successfully incorporated into the CAA 2023 legislative package. CAA 2023 provides that HDHPs may provide first-dollar telehealth and other remote care services for plan years beginning after December 31, 2022 and before January 1, 2025 (i.e., the 2023 and 2024 plan years for employers with a calendar plan year). Those telehealth or other remote care services do not need to be preventive services or related to Covid to qualify for the relief.
This means individuals covered under a HDHP that waives the deductible for any telehealth services or other remote care in 2023 and 2024 can maintain HSA eligibility.
As with the prior CARES Act and CAA 2022 relief, this CAA 2023 extension of the telehealth HSA relief provision is optional. That leaves it up to each HDHP to determine whether it will waive the deductible for telehealth and other remote care. Employers with fully insured plans will rely on the insurance carrier for this determination. Employers with a self-insured plan should generally work with their TPA and stop-loss provider to coordinate whether they will take advantage of the relief.
Note: For employers with a non-calendar plan year, there will be a gap in the relief from
January 2023 until the start of the first plan year beginning in 2023 (in which the standard
deductible will still apply)
The CARES Act and CAA 2022: The Original HSA Telehealth Relief and Extension
The CARES Act provided that for plan years beginning on or before December 31, 2021 (i.e., the 2020 and 2021 plan years for employers with a calendar plan year), HDHPs could provide first-dollar coverage for telehealth or other remote care services. CAA 2022 provided an extension to the relief by permitting HDHPs to provide first-dollar telehealth and other remote care services for the months of April 2022 – December 2022.
With both pieces of relief, those telehealth or other remote care services did not need to be preventive services or related to Covid to qualify. This meant that individuals covered under a HDHP that blanket waived the deductible for telehealth services or other remote care during the applicable relief periods could maintain HSA eligibility.
The CARES Act and CAA 2022 relief was optional, leaving it up to each HDHP to determine whether it would waive the deductible to telehealth and other remote care. Employers with fully insured plans relied on the insurance carrier for this determination. Employers with a self-insured plan could generally work with their TPA and stop-loss provider to coordinate whether they took advantage of the relief.
Recent HSA Expansions: Preventive, CARES Act, CAA, and Covid-Related HSA Eligibility Changes
After remaining relatively stable for an extended period since the HSA inception point in 2004, HSAs have experienced a whirlwind of enhancements in recent years. Although none of the changes by themselves are revolutionary, the modifications are significant in the aggregate.
Taken together, these changes have significantly improved HDHPs and HSAs by increasing reimbursable expenses and eliminating unnecessary barriers to eligibility:
Expansion of Preventive Care Services (effective July 2019)
Free Covid Testing (effective March 2020)
Over-the-Counter Medicines and Drugs (effective for expenses incurred on or after January 1, 2020)
Menstrual Care Products (effective for expenses incurred on or after January 1, 2020)
Personal Protective Equipment (effective for expenses incurred on or after January 1, 2020)
No Surprises Act (effective for plan years beginning on or after January 1, 2022)
Reminder: The Original CAA Included Significant Group Health Plan Changes
The Consolidated Appropriations Act, 2021 (“CAA 2021”) made far more sweeping changes to employee benefits than CAA 2022 and CAA 2023. Although CAA 2021 may not have been intended as a health bill, it has proven to be the most significant health care reform effect since the ACA.
The most prominent of the CAA 2021 provisions for health plans is the No Surprises Act, which prevents surprise emergency, non-emergency, and air ambulance bills, as well as providing for temporary continuity of care rights for certain patients who lose access to network providers.
Also included in CAA 2021 are provisions requiring (with staggered effective dates) the mental health parity comparative analysis, medical ID cost-sharing information, machine-readable rates, annual reporting on pharmacy benefits and drug costs, and price transparency, disclosure, and comparison tools.
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The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.