In response to the COVID-19 pandemic, the U.S. Congress enacted legislation that temporarily allowed high deductible health plans (HDHPs) to provide benefits for telehealth services before plan deductibles were met. This relief became effective in 2020 and was repeatedly extended. It currently applies to plan years beginning before Jan. 1, 2025. This means the relief ended on Dec. 31, 2024, for HDHPs with the calendar year as their plan year.
As background, to be eligible for health savings account (HSA) contributions, individuals cannot be covered by a health plan that provides benefits, except preventive care benefits, before the minimum HDHP deductible is satisfied for the year. Generally, individuals who are covered by telehealth programs that provide free or reduced-cost medical benefits are not eligible for HSA contributions. However, due to the pandemic-related relief, HDHPs have been able to waive the deductible for telehealth services without jeopardizing individuals’ HSA eligibility.
Starting in 2025, providing telemedicine benefits other than just preventive care at no cost (or low cost) to participants makes them ineligible for HSA contributions. There has been bipartisan support to extend telemedicine relief for HDHPs either permanently or temporarily; however, Congress failed to extend this relief at the end of 2024. It remains to be seen if Congress will revive this relief in 2025.
Action Steps
Employers with HDHPs should review their health plan’s coverage of telehealth services to determine if changes should be made for the plan year beginning in 2025. For plan years beginning in 2025, the minimum HDHP deductible is $1,650 for self-only coverage and $3,300 for family coverage. Any changes to telehealth coverage should be communicated to plan participants through an updated summary plan description or a summary of material modifications.
Highlights
- In general, to be compatible with HSA contributions, an HDHP cannot pay benefits until the minimum deductible has been satisfied.
- A pandemic-related relief measure temporarily allowed HDHPs to waive the deductible for telehealth or other remote care services without impacting HSA eligibility.
- This relief expired on Dec. 31, 2024, for calendar-year HDHPs.
Important Dates
Jan. 1, 2020—The CARES Act allowed pre-deductible coverage of telehealth services effective Jan. 1, 2020. This relief was extended and currently applies through the 2024 plan year.
Dec. 31, 2024—The telehealth relief for calendar-year HDHPs expired on this date. This date will be effective your plan year in 2025, so your telehealth rule changes may yet to take effect and now is the time to strategize with your Leavitt Group Trusted Advisor.
Conclusion
These changes will impact most HDHPs. It is important have telehealth services counted as if any other first dollar coverage. Without fair market value applied towards the deductible, the plan participants may not be eligible for HSAs because they had first dollar telehealth coverage. Consult with your Leavitt Group Trusted Advisor who can walk you through what can and cannot be done considering this rule change. Consider contributing their HSA to make up for having to cover first-dollar the telehealth services they used to get, essentially, free. Consult with your Trusted Advisor about when those HSA contributions can be made. There are details that matter, and we are here to help you navigate them compliantly!
Source: Zywave. Some content by Leavitt Group.