CAA 2023: Congress Extends Telehealth Flexibility for Two Years

On December 29, 2022, the Continuing Appropriations Act, 2023 (CAA 2023) was enacted. In addition to other measures, this law includes a two-year extension of telehealth coverage flexibility for HSA compliant high deductible health plans. This is the second extension of pandemic-related HDHP telehealth coverage relief.

Typically, a high deductible health plan (HDHP) is only permitted to pay benefits after the deductible has been met, with the exception of preventive services, in order for plan participants to qualify for contributions to their HSAs. In response to the COVID-19 pandemic, the CARES Act included a safe harbor for HDHPs that begin on or before December 31, 2021, that provided predeductible coverage for telehealth and other remote care services. The plans that provided this coverage did not lose HSA eligibility. The telehealth or remote services do not need to be preventive or related to COVID-19 to qualify. This flexibility is optional, HDHPs are not required to provide first dollar coverage for telehealth services. The Consolidated Appropriations Act 2022 (CAA 2022) extended this relief between April 1, 2022, and December 31, 2022. This did create a gap in relief for telehealth services from January 1, 2022, and March 31, 2022. The relief was set to expire December 31, 2022. CAA 2023 CAA 2023 further extends this telehealth flexibility for HDHPs for two years. Section 4151 of the law provides that HDHPs with plan years beginning after December 31, 2022, and before January 1, 2025, may rely on the telehealth safe harbor established in the CARES Act and provide telehealth services on a first-dollar basis.

While the CAA 2022 relief was provided simply on a monthly basis regardless of when the plan year begins or ends, the CAA 2023 two-year extension is based on a plan year. This appears to create another gap in relief for non-calendar year plans. For 2022 plan year dates that fall in 2023, neither the CAA 2022 relief nor the CAA 2023 relief will apply. Take, for example, a plan year that renews on April 1, 2023. The CAA 2022 relief expired December 31, 2022 regardless of where the plan year falls. The period of January 1 - March 31, 2023 is still within the 2022 plan year. The CAA 2023 relief as written does not kick in until the plan year renews in April, apparently creating this gap.