By: HUB’s EB Compliance Team

Back in November, HUB advised that telehealth flexibility for high deductible health plans was ending. However, as part of the omnibus funding bill recently passed by Congress, it is now back, but only for months from April 1 until the end of this year.

Back to the Future Part II

Normally, high deductible health plans (“HDHPs”) cannot cover medical items or services (other than preventive care) before reaching the deductible. A violation of this rule makes covered individuals unable to contribute to a health savings account (or have contributions made on their behalf).  Specifically, for telehealth visits that were not preventive in nature, this means employees and dependents have to pay a fair market value charge for a telehealth visit before meeting the deductible.

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) Act, Congress temporarily allowed HDHPs to cover telehealth before hitting the deductible. This allowed individuals to still contribute (or receive contributions to) an HSA even if their plan paid for telehealth visits first dollar or otherwise before the deductible was met.  The thinking was that this would help prevent the spread of COVID-19 by keeping individuals from going out in public, but would still allow them to receive necessary medical services.

It's Not for Everyone

The new omnibus extension of this relief only applies to months from April 1, 2022, through December 31, 2022. Note that this is not based on plan years. Therefore, any HDHP that wants to can provide coverage for telehealth prior to the deductible, but only through the end of this year, regardless of its plan year.

For plans that are not calendar year HDHPs, this relief may overlap with the existing CARES Act relief. Under the CARES Act, HDHPs could provide first dollar coverage for telehealth for plan years beginning before January 1, 2022. For example, a HDHP with an July 1 plan year start would still be able to offer first dollar coverage of telehealth through June 30, 2022, under the CARES Act.  This new relief would only allow that plan to extend the coverage through December 31, 2022, regardless of its plan year.

On the other hand, calendar year plans that appropriate dropped pre-deductible telehealth coverage effective January 1, 2022 now have the option to reinstate it, but only for the remainder of this calendar year.

Takeaways

While employers may want to provide this flexibility, this limited temporary extension may not be long enough to warrant the trouble. In considering whether to allow this under their HDHPs, employers should take this into account:

  1. For insured HDHPs, employers should confirm whether their insurer will be allowing this relief.
  2. For self-funded HDHPs, employers should check with their third party administrator or administrative services only provider to see if they are able to change their claims systems to accommodate this.
  3. In either case, the cost impact should be considered.
  4. Any change should be communicated to employees. Given the haphazard and patchwork nature of this relief, this limited extension may cause some employee confusion. Therefore, employers should communicate repeatedly and clearly. 
  5. Employers who adopt this will also need to communicate again at the end of this calendar year to let employees know that the relief is going away.
  6. Changes to summary plan descriptions (through summaries of material modifications) and potentially to summaries of benefits and coverage may also be required.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.