Congress Set to Pass Short-Term Renewal of Pre-Deductible Telehealth Coverage
Oscar W.
Health plan sponsors scored a win in the government spending package (see Section 307 on p. 1908) Congress is set to approve within days, with lawmakers including a temporary revival and extension of expired COVID-19 telehealth relief.
That relief allowed (i) health savings account (HSA)-qualifying high-deductible health plans (HDHPs) to cover telehealth and other remote care services on a predeductible basis, and (ii) an otherwise HSA-eligible individual to receive predeductible coverage for telehealth and other remote care services from a stand-alone vendor outside of the HDHP, both without jeopardizing an individual’s eligibility to make or receive HSA contributions.
The legislation revives and extends the telehealth relief provided in the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, from April 1, 2022, through December 31, 2022. That relief expired at the end of 2021 for calendar-year plans (later for noncalendar-year plans). Unfortunately, the revived relief is not retroactive to Jan. 1, 2022, so employers and lawmakers will continue to urge the IRS not to enforce the pre-CARES Act restrictive HDHP/HSA rule that technically makes an individual with predeductible telehealth coverage ineligible for HSA contributions during the first quarter of 2022 as Congress considers a retroactive renewal and extension.
Unless the IRS agrees to a nonenforcement position, employer plan sponsors that applied this relief during the first three months of 2022 – possibly in hopes that Congress would extend the relief without a gap effective Jan. 1, 2022 – should consult with tax counsel and other trusted advisors about potential solutions. One administratively burdensome and disruptive solution might include going back and charging participants fair-market value for any predeductible telehealth services received during the first quarter of 2022. As a technical matter, predeductible telehealth coverage received during those three months render an individual ineligible for HSA contributions during that time. However, other helpful HSA rules – specifically the “last-month rule” – may nevertheless allow for a full-year’s HSA contribution, even for dollars contributed during the period for which an individual was HSA-ineligible.
Congress is aiming to clear the spending bill, which will fund federal agencies through September 30, for the president’s signature before stopgap funding expires at midnight Friday, March 11. Final passage could be delayed until the weekend but will likely come in time to avoid a partial government shutdown on Monday, March 14.
Mercer and many other organizations will continue to urge Congress to make this telehealth relief permanent as proposed in the bipartisan Telehealth Expansion Act (HR 5981/S 1704). Telehealth has earned broad bipartisan support in Congress and among Americans, but lawmakers’ concerns over potentially higher costs and increased fraud have been obstacles to expansion and relief that is more generous.
Mercer is also joining with others in asking lawmakers to make permanent the temporary telehealth policy provided by regulators during the ongoing COVID-19 public health emergency (PHE) that treats telehealth and remote care services like an excepted benefit, eliminating the need for the coverage to comply with many ERISA and ACA group health plan mandates (e.g., first-dollar coverage of ACA-mandated preventive care).
This relief allows employers to offer telehealth arrangements not just to benefits-ineligible employees like part-time or seasonal workers, but also to employees who opt out of the employer-sponsored major medical plan. The Biden administration isn’t expected to end the PHE until later this year at the earliest. The current PHE is now set to expire April 15, but the administration has said it would give 60 days’ notice before terminating the PHE (or letting it expire), a deadline that has now passed. The potential for a looming expiration of the PHE later this year could spur Congress to take up telehealth legislation again in an expected post-election lame-duck session, if not sooner.