2023 Consolidated Appropriations Act, including Telemedicine & HSA Relief, Signed into Law

As we previously reported, the 2023 Consolidated Appropriations Act (CAA 2023) includes language extending the temporary relief permitting telemedicine plans to be offered in conjunction with Health Savings Accounts (HSAs) without including a deductible or charging a fair market value (FMV) fee. The bill has now been signed into law by President Biden with the telemedicine/HSA relief language intact.

Calendar year plans can begin taking advantage of the relief right away without interruption. Employees with HSAs can participate in a telemedicine plan with no cost-sharing and remain HSA eligible for both the 2023 and 2024 plan years. Unfortunately, as drafted, the CAA 2023 creates a gap in the relief for non-calendar year plans. The old telemedicine/HSA relief ends as of December 31, 2022, but the new relief in CAA 2023 does not begin until the start of the 2023 plan year. So for a non-calendar year HSA plan, from January 1, 2023 until the start of the next plan year employees with an HSA must either 1) be excluded from the telemedicine plan; or 2) pay a fair FMV fee each time they use the telemedicine service until they have incurred medical expenses at least equal to the minimum required HDHP deductible. Failure to do so could result in a portion of those employees’ 2023 HSA contributions being subject to income taxes and penalties. Once the relief does kick in employees can once again participate in the telemedicine plan and/or the FMV fees may be dropped for both the plan year that starts in 2023 as well as the plan year that starts in 2024.

Conclusion

We’re hopeful the IRS may issue some guidance that somehow closes this gap for non-calendar year plans. But for now employers with non-calendar year plans should assume they will have to charge FMV fees on their telemedicine programs for the end portion of the 2022 plan year if they don’t want to jeopardize their employees’ HSA contributions.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.