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Quick Hits
- 2024 year-end HDHP plan amendments: Employers that offer HDHPs may need to amend their plans before the end of the year to remove first-dollar telehealth coverage since the regulatory relief allowing this coverage without cost sharing is set to expire at the end of 2024.
- Impact on HSA contributions: Absent an extension of regulatory relief permitting employers to provide telehealth coverage without cost sharing, starting on January 1, 2025, employees covered by an HDHP that includes telehealth services with no cost sharing will no longer be eligible to contribute to an HSA.
As background, the CARES Act of 2020, as extended through the Consolidated Appropriations Act, 2023, allowed (but did not require) HDHPs to provide first-dollar telehealth coverage without negatively impacting HSA eligibility for employees participating in that HDHP. By design, this relief expires at the end of the 2024 plan year. That means that for plan years beginning on January 1, 2025, and later, employees covered by an HDHP with telehealth that imposes no cost sharing will lose eligibility to contribute to their HSAs.
Note that if an employer sponsors an HDHP with a non-calendar year plan year, the relief will continue until the plan year that commenced in 2024 ends in 2025 (e.g., the relief will extend through April 30, 2025, for a plan year beginning May 1, 2024).
Although legislation (S. 731 and H.R. 1843) to extend this relief is pending, employers may want to prepare to take action if an extension is not adopted prior to year-end. Unless the relief is extended again, individuals who currently have access to first-dollar telehealth coverage will not be eligible to contribute to an HSA in 2025. To avoid that result, employers offering an HDHP to employees may want to consider charging a copay for telehealth services starting in 2025. Those employers that already addressed this issue during open enrollment may want to confirm that their plan documents, summary plan descriptions, summary of benefits, and coverage are updated to reflect any changes to participant cost-sharing for telehealth. Also, this is a good time to review participant communications relating to HSA eligibility to confirm accuracy for HDHP with telehealth coverage.
Ogletree Deakins’ Employee Benefits and Executive Compensation Practice Group will continue to monitor developments and will provide updates on the Employee Benefits and Executive Compensation blog as additional information becomes available.
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