Effective April 1, 2022, high-deductible health plans can once again offer first-dollar coverage for telehealth and other remote services without making participants ineligible for health savings account (“HSA”) contributions.  The relief runs only through the end of 2022, and the regular high-deductible health plan requirements generally apply for the months of January through March 2022.  (But there is no gap if the plan’s current plan year started before January 1, 2022.)

By way of background, to be eligible to make or receive contributions to an HSA, an individual must be covered by a high-deductible health plan.  Subject to limited exceptions, coverage under a health plan before the minimum deductible is satisfied would make plan participants ineligible to make or receive HSA contributions.  If contributions are made while a participant is ineligible, the contributions would have to be included in the participant’s income (i.e., subject to income tax) and the contributions would be subject to a 10% additional tax.

Section 223 of the Internal Revenue Code includes exceptions to the minimum deductible requirement for preventive care, employee assistance programs, and certain other “permitted insurance.”   The 2020 CARES Act (Coronavirus Aid, Relief, and Economic Security Act) added an exception for telehealth and other remote services, but that exception applied only from enactment of the CARES Act through the last plan year that started before January 1, 2022.

The Consolidated Appropriations Act of 2022 (signed into law on March 15th) restores the exception for telehealth and other remote services, but only for the period from April 1 through December 31, 2022.  This means that if a plan’s year started at any time from January 1, 2022 through March 31, 2022, and the plan did not impose the minimum deductible for telehealth or other remote services from the start of the plan year through March 31, 2022, the plan would not be a high-deductible health plan for that period.  Consequently, participants covered by the plan would be ineligible to make or receive HSA contributions for that period.

Plan sponsors who were expecting the telehealth exception to be restored back to January 1st should consult with counsel on practical ways to ensure that participants retain their eligibility for HSA contributions.

Photo of Seth Safra Seth Safra

Seth J. Safra is co-chair of Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined…

Seth J. Safra is co-chair of Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined benefit to cash balance and floor-offset arrangements, ESOPs and 401(k) plans—often coordinating qualified and non-qualified arrangements. He also advises tax-exempt and governmental employers on 403(b) and 457 arrangements, as well as innovative new plan designs; and he advises on ERISA compliance for investments.

On the health and welfare side, Seth helps employers provide benefits that are cost-effective and competitive. He advises on plan design, including consumer-driven health plans with HSAs, retiree medical, fringe benefits, and severance programs, ERISA preemption, and tax and other compliance issues, such as nondiscrimination and cafeteria plan rules.

Seth also advises for-profit and non-profit employers, compensation committees, and boards on executive employment, deferred compensation, change in control, and equity and other incentive arrangements. In addition, he advises on compensation and benefits in corporate transactions.

Seth represents clients before the Department of Labor, IRS and other government agencies.

Seth has been recognized by Chambers USA, The Legal 500, Best Lawyers, Law360, Human Resource Executive, Lawdragon and Super Lawyers.