2022 Draft instructions for Form 8889 highlight legislative changes

The IRS released draft instructions for Form 8889, Health Savings Accounts (HSAs), for the 2022 tax year to reflect several important legislative changes. They include:

• the extension of safe harbor and disregarded coverage for telehealth and other remote care services; and
• no surprise billing for emergency or air ambulance services.

Telehealth and other remote care services

For months beginning after March 31, 2022, and before January 1, 2023, the draft instructions note that an eligible individual may have separate coverage for telehealth and other remote care services, in addition to a high deductible health plan. During this period, telehealth and remote care is permitted without jeopardizing an individual's eligibility to establish an HSA.

During the same nine-month time period, a high deductible health plan may have no deductible (or a deductible below the minimum annual deductible) for telehealth and other remote care services. This allows HSAs to pay for the cost of telehealth or remote care without an individual first having to satisfy HDHP deductible requirements.

These provisions were extended by the Consolidated Appropriations Act 2022 (P.L. 117-103).

Billing for emergency or air ambulance services

The draft instructions outline several provisions that guarantee plan payments do not cause a loss of HSA eligibility for plan years beginning after 2021. Significantly, HSA eligible individual status is not lost when benefits for medical care are received by a non-participating provider for:

• emergency services without prior authorization in a non-nonparticipating emergency facility;
• non-emergency services at a participating facility; or 
• air ambulance services, provided the health plan covers certain services.

According to the draft instructions, under these rules, insured individuals will pay in-network amounts for these emergency and air ambulance services even though they are furnished by out-of-network providers.

These provisions were enacted by the Consolidated Appropriations Act 2021 (P.L. 116-260).