IRS appears set to enforce gaps in telemedicine relief for HDHPs/HSAs

Beginning in 2020, the federal government enacted the first of three laws creating a patchwork of temporary relief excluding telemedicine as disqualifying other health coverage when provided in conjunction with a high deductible health plan (HDHP) and affecting eligibility for HSA contributions:

• The Coronavirus Aid, Relief and Economic Security Act;
• The Consolidated Appropriations Act, 2022; and
• The Consolidated Appropriations Act, 2023.

While the three laws generally provide relief for HDHP plan years from 2020 – 2024, there are certain gaps in the relief that potentially affect the annual HSA maximum contribution limit for many HDHP participants. Until recently, it was not clear if the IRS would enforce the gaps in the telemedicine relief, but the IRS now appears set to do so. This Alert addresses why telemedicine can interfere with HSA contributions, the temporary relief intended to address this, the gaps in that relief, and the potential effects on employees.