The latest legislative package in response to the coronavirus pandemic would expand the use of telemedicine without upsetting the tax status of health savings accounts.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748), which passed the Senate on March 25, includes a safe harbor for telehealth services provided in the absence of a deductible.
In Notice 2020-15, 2020-14 IRB 1, issued March 11, the IRS said that providing benefits for testing and treatment for COVID-19 without a deductible won’t violate the rules for high-deductible health plans and HSAs. But the new bill goes even further.
“If you have an HSA-qualified high-deductible health plan, you can allow for telehealth not just for COVID-19 treatment and testing, but for anything,” John R. Hickman of Alston & Bird LLP said March 26 during a webinar hosted by his firm. Practitioners had previously expressed concern that only allowing telemedicine for coronavirus-related services could lead to confusion for telehealth administrators.
Hickman said there are lots of employers with health plans that have innovative features incorporating telehealth that would be able to extend those options to high-deductible plans without jeopardizing the HSA’s qualified status.
“This has huge implications going forward even beyond the COVID-19 crisis,” Hickman said. The change would apply to plan years beginning on or before December 31, 2021.
OTC Medicine Rule
The CARES Act also reverses the Affordable Care Act rules on over-the-counter medicines for HSAs, health reimbursement arrangements, and flexible spending accounts, Hickman said.
“What that does is it makes those benefits tax advantaged even without a prescription,” Hickman said, adding that this would apply retroactively beginning January 1, 2020. He said plan documents may need to be updated to ensure that they don’t prohibit reimbursement for these products.
The bill would also provide for the reimbursement of menstrual care products.