Two-year renewal of predeductible HDHP telehealth coverage now law 

January 11, 2023

A two-year extension of COVID-19 telehealth relief for health savings account (HSA)-qualifying high-deductible health plans (HDHPs) became law on Dec. 29, 2022, as part of a government spending package, the 2023 Consolidated Appropriations Act (Pub. L. No. 117-328, see Section 4151). The legislation extends through plan years beginning in 2023 and 2024 the telehealth relief originally provided in the 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act (Pub. L. No. 116-136). Congress initially granted the relief for plan years starting on or before Dec. 31, 2021, and renewed it in the 2022 Consolidated Appropriations Act (Pub. L. No. 117-103) for April 1 through Dec. 31, 2022. Without a permanent or another temporary extension, the current telehealth relief will expire on Dec. 31, 2024, for calendar-year plans (later for noncalendar-year plans).

Relief applies to HSA-qualifying HDHPs

The relief allows HSA-qualifying HDHPs to cover telehealth and other remote care services on a predeductible basis. In addition, an otherwise HSA-eligible individual can receive predeductible coverage for telehealth and other remote care services from a stand-alone vendor outside of the HDHP. In both cases, the predeductible telehealth coverage won’t jeopardize an individual’s eligibility to make or receive HSA contributions.

However, instead of beginning on Jan. 1, 2023, the extended relief takes effect for plan years beginning after Dec. 31, 2022, leaving a gap for noncalendar-year plans from Jan. 1, 2023, until the 2023 plan year begins. For example, a noncalendar-year HDHP that initially adopted the relief for the July 1, 2021–June 30, 2022, plan year (per the CARES Act), then extended the relief through Dec. 31, 2022 (per the 2022 CAA), and wants to continue that relief into 2023 (per the 2023 CAA) will have a gap from Jan. 1–June 30, 2023. That’s because the 2022 CAA relief applied only for the calendar months of April–December 2022 (rather than on a plan-year basis), and the 2023 CAA relief applies only to plan years beginning after Dec. 31, 2022.

Outlook for further telehealth relief

Mercer and many other organizations will continue to urge Congress to make this telehealth/HDHP relief permanent, as proposed in last Congress’s bipartisan Telehealth Expansion Act (HR 5981 and S 1704). Telehealth has earned broad bipartisan support in Congress and among Americans, but lawmakers’ concerns about potentially higher costs and increased fraud have hindered expansion and more generous relief.

Congress did not extend the temporary telehealth policy provided by regulators for the duration of any plan year beginning before the end of the COVID-19 public health emergency (PHE). That policy treats telehealth and remote care services like an excepted benefit, eliminating the need for the coverage to comply with many ERISA and Affordable Care Act (ACA) group health plan mandates (e.g., first-dollar coverage of ACA-mandated preventive care). This temporary policy allows employers to offer telehealth arrangements only to benefits-ineligible employees like part-time or seasonal workers.

Mercer will continue to work with the plan sponsor community and the new Congress to make the telehealth policy permanent and more expansive. Unlike the current temporary policy, legislation (HR 7353) expected to be reintroduced in the new Congress would let all employers, regardless of size, offer excepted-benefit stand-alone telehealth arrangements to all employees (including benefit-eligible opt-outs), not just those ineligible for benefits.

The potential end of the PHE this year could spur lawmakers to action. The Biden administration just renewed the PHE until April 11, 2023, but could consider ending it at that point or shortly thereafter. Discontinuation of the PHE would end several other temporary employer plan flexibilities in addition to telehealth excepted-benefit status. The administration has said it would give 60 days’ notice before terminating the PHE (or letting it expire).  

Other group health plan proposals left out of the year-end spending measure are likely to be taken up this year. Those proposals include new transparency requirements for pharmacy benefit managers (PBMs), caps on consumers’ out-of-pocket costs for insulin, a requirement for employer plans to cover kidney dialysis benefits on par with benefits for other chronic medical conditions, and new authority for the Labor Department to impose civil monetary penalties for mental health parity violations.

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