8828 / What is a high deductible health plan for purposes of an HSA?

Editor’s Note: In response to the COVID-19 pandemic, the CARES Act allowed HDHPs to cover the cost of telehealth services without cost to participants before the HDHP deductible is satisfied. HDHPs providing telehealth coverage do not jeopardize their status as HDHPs. Plan members similarly retained the right to fund HSAs after taking advantage of cost-free telehealth services. The Consolidated Appropriations Act of 2022 (CAA 2022) extended the CARES Act relief so that HDHPs could provide first-dollar telehealth services from April 2022 through December 2022 (regardless of the plan year) without jeopardizing HDHP status. The remote services do not have to be related to COVID-19 or preventative in nature to qualify. Plans and participants should note that if the HDHP is a calendar year plan, the usual rules regarding the plan deductible applied between January 2022 and March 2022. The 2023 year-end omnibus spending bill extended this relief again, although it should be noted that instead of beginning on January 1, 2023, the relief is effective for plan years beginning after December 31, 2022 and before January 1, 2025 (that means a gap will exist for non-calendar year plans from January 1, 2023 until the date that the plan year begins). The ability to provide pre-deductible remote health services is optional for employers.

In Notice 2023-37, the IRS confirmed that that the special rules allowing pre-deductible coverage of COVID-related testing and treatment will end as of December 31, 2024. The guidance also states that the preventive care safe harbor does not include COVID-19 testing as of July 24, 2023.

Under the Inflation Reduction Act, HDHPs will be permitted to cover insulin prior to the participant satisfying the plan deductible effective for tax years beginning after December 31, 2022. This insulin coverage will not adversely affect a participant’s eligibility to contribute to an HSA. Going forward, HDHPs will be permitted to cover selected insulin products before the deductible is satisfied regardless of whether the participant has been diagnosed with diabetes. “Selected insulin products” is defined to include any dosage form, including vials, pumps, or inhalers of any type of insulin.