Just in time to avoid a federal shutdown, Congress has passed a massive $1.5 trillion omnibus government funding bill titled the Consolidated Appropriations Act, 2022 (“CAA 2022”).  Included among the more than 2,000 pages is a provision affecting employee benefits.

The CAA 2022 extends HSA relief permitting high deductible health plans (“HDHPs”) to provide first-dollar telehealth and other remote care services for the months of April 2022 – December 2022, regardless of plan year.  Those telehealth or other remote care services do not need to be preventive or related to Covid-19 to qualify for the relief.

The practical effect of the relief is that HDHPs may choose to waive the deductible for any telehealth services from April 2022 – December 2022 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.

This CAA 2022 HSA relief is an extension of the CARES Act provision, which provided the same telehealth relief 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).

Note: For calendar plan year HDHPs adopting this CAA 2022 extension of the relief, there will be a three-month gap from January 2022 – March 2022 in which the standard deductible will still apply.

General Rule: HSA Eligibility

The general rule is that an individual must meet two 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 2022, the HDHP minimum deductible is $1,400 for single coverage, and $2,800 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** 2022 Newfront Go All the Way With HSA Guide.**

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:

(effective July 2019)

• Expansion of HDHP first-dollar coverage availability to include medical services and items to prevent exacerbation of a chronic condition.

• Full details: IRS Expands Definition of Preventive Care for HDHPs

(effective March 2020)

• Plans will not fail to maintain HDHP status if they provide first-dollar coverage for medical care services and items purchased related to testing for and treatment of Covid.

• Full details: IRS and DOL Issue Covid-19 Guidance Regarding HSA Eligibility

(effective for expenses incurred on or after January 1, 2020)

• HSAs (and FSAs and HRAs) may reimburse over-the-counter medicines and drugs without the need for a prescription.

• Full details: How the CARES Act Affects Employee Benefits

(effective for expenses incurred on or after January 1, 2020)

• HSAs (and FSAs and HRAs) may reimburse menstrual care products—including tampons, pads, liners, cups, sponges, or other similar products.

• Full details: How the CARES Act Affects Employee Benefits

Personal Protective Equipment (effective for expenses incurred on or after January 1, 2020)

• HSAs (and FSAs and HRAs) may reimburse PPE such as masks, hand sanitizer, and sanitizing wipes for the primary purpose of preventing the spread of Covid.

• Full details: PPE Now Qualifies as FSA/HRA/HSA Eligible Medical Expense

No Surprises Act (effective for plan years beginning on or after January 1, 2022)

• HSA eligibility and HDHP status is not affected by surprise billing benefits made under the CAA’s No Surprises Act provisions (or similar state law protections).

• Full details: CAA Surprise Billing Rules Preserve HSA Eligibility

CARES Act: The Original HSA Telehealth Relief

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—regardless of whether the services were preventive or related to Covid.  This means that individuals covered under a HDHP that waived the deductible for telehealth services or other remote care could maintain HSA eligibility.

The CARES Act 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.

For full details, see:

• Newfront Office Hours Webinar: 2021 Year in Review

• How the CARES Act Affects Employee Benefits

CAA 2022: A Brief Extension of the CARES Act HSA Telehealth Relief for April – December 2022

In a provision that may either fall into the “too little, too late” column, or the “better late than never” side of the ledger depending on your prospective, the Consolidated Appropriates Act, 2022 (“CAA 2022”) extended the CARES Act HSA telehealth relief.

Rather than focusing on plan year start dates, the CAA 2022 approach takes a simple across-the-board approach for all plans regardless of plan year.

CAA 2022 provides that HDHPs may provide first-dollar telehealth and other remote care services for the months of April 2022 – December 2022.  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 from April 2022 – December 2022 can maintain HSA eligibility.

Note that for employers with a calendar plan year, this leaves an unfortunate gap from January 2022 through March 2022 without any telehealth relief in place.  Non-preventive telehealth services provided during this three-month period must still be subject to the HDHP deductible to avoid disrupting a participant’s HSA eligibility.

As with the prior CARES Act relief, this CAA 2022 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.

Reminder: The Original CAA Included Significant Group Health Plan Changes

The Consolidated Appropriations Act, 2021 (“CAA 2021”) made more sweeping changes to employee benefits than CAA 2022.  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.

The CAA 2021 also included an extension through 2025 of the 2020 CARES Act provision permitting employers to provide up to $5,250 in tax-free student loan repayment assistance.

For full details, see:

• Newfront Office Hours Webinar: 2021 Year in Review

• The CAA Patient Protection Provisions Under the No Surprises Act

• The CAA Mental Health Parity Comparative Analysis Requirement

• The CAA Tax-Free Student Loan Repayment Extension Through 2025

Summary

An extension of the telehealth HSA relief would have been much more welcome prior to the start of 2022 so employers with a calendar plan year could keep the provision in place without interruption for the entire year.

This mid-year extension under CAA 2022 for only the months of April 2022 – December 2022 leaves many employers with the difficult decision of whether it is worth the administrative burden to implement this change in plan design for a portion of the year.

Nonetheless, the short extension may still provide significant relief for the remainder of the year to HDHP participants now relying more heavily on telehealth services since the onset of the pandemic.