Can a Telehealth-Only Plan Continue After the End of the COVID-19 Emergency?

Can a Telehealth-Only Plan Continue After the End of the COVID-19 Emergency?

Question: During the COVID-19 pandemic, we established a telehealth-only plan to provide benefits to individuals who were not eligible for coverage under our regular group health plan. Can we continue to offer this benefit?

ANSWER: During the COVID-19 pandemic, telehealth-only benefits have been exempt from certain requirements that otherwise apply to group health plans. This relief is linked to the COVID-19 public health emergency (PHE), which appears slated to end on May 11, 2023. Once the exemption is no longer available, a telehealth-only plan may continue but it would have to meet those requirements.

As group health plans, telehealth plans must comply with the many rules applicable to group health plans under ERISA, COBRA, HIPAA, and the Affordable Care Act (ACA). The COVID-19 telehealth relief exempts certain plans from the ACA’s prohibition on annual and lifetime limits and its preventive services mandate—but not from other ACA mandates. The relief applies to any arrangement sponsored by a large employer (generally, one with at least 51 employees) that provides solely telehealth and other remote-care benefits and is offered only to employees or dependents who are not eligible for coverage under any other group health plan offered by that employer.

The relief took effect in 2020 and applies for the duration of any plan year beginning before the end of the COVID-19 PHE. If the PHE ends on May 11, 2023, a calendar year telehealth-only plan could remain covered by the exemption until the end of 2023. But if the plan year is, for example, June 1–May 31, the relief applies only until the end of the current plan year on May 31, 2023; as of June 1, 2023, that plan would have to comply with the preventive services mandate and the prohibition on annual and lifetime limits.

Source: Thomson Reuters

Can a Telehealth-Only Plan Continue After the End of the COVID-19 Emergency?

Can an Adult Child’s Medical Expenses Be Reimbursed Tax-Free From a Parent’s HSA?

QUESTION: Our company sponsors a high-deductible health plan (HDHP) in conjunction with employee HSAs. Can the medical expenses of our employees’ adult children who otherwise qualify for tax-free coverage under the HDHP be reimbursed tax-free from the employees’ HSAs? 

ANSWER: Not necessarily—it depends on whether the adult children qualify as tax dependents under the HSA rules. As group health plans, HDHPs that provide dependent coverage of children must make the coverage available until a child turns age 26. (The age 26 mandate does not generally apply to HSAs because they are not group health plans.) The income exclusion for employer-provided health coverage includes employees’ children who are under age 27 as of the end of the taxable year, regardless of whether those children qualify as tax dependents. But similar provisions do not appear in the HSA tax-free reimbursement rules. Instead, whether an adult child’s medical expenses can be reimbursed tax-free from a parent’s HSA depends on whether the child qualifies as a tax dependent for HSA distribution purposes—i.e., whether the adult child is a qualifying child (for example, due to disability) or a qualifying relative (where the parent provides over one-half of the child’s support). Distributions from a parent’s HSA that reimburse a nondependent adult child’s medical expenses are taxable and may be subject to an additional 20% tax. 

Thus, the medical expenses of some adult children who are enrolled as dependents in your company’s HDHP will not qualify for tax-free reimbursement from the employee-parent’s HSA. It is possible, however, that these children may be HSA-eligible themselves. If they cannot be claimed as tax dependents and they meet the other HSA eligibility requirements, they could open HSAs of their own. 

Source: Thomson Reuters

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