The extension for first dollar coverage of telehealth care for plan sponsors that offer a high deductible health plan (HDHP) paired with a health savings account (HSA) did not make the final spending bill signed by President Biden on December 21, 2024. There’s hope that this measure will be brought back in 2025 by the new (119th) Congress and made retroactive. But for now, the safe harbor is no longer available and, therefore, individuals who are covered by an HDHP with no cost sharing for telehealth services will not be eligible to contribute to an HSA for plan years beginning in 2025.
The Extensions The first HSA-qualified HDHP telehealth safe harbor was provided under the “CARES Act” effective on March 27, 2020, for plan years beginning on or before December 31, 2021, permitting HDHPs to cover telehealth or other remote-care services before the plan’s deductible was met. Subsequent legislation further extended the telehealth flexibility from April 1, 2022, through December 31, 2022, and then it was again further extended for plan years beginning after December 31, 2022, and before January 1, 2025. The extension has now ended for calendar year plans starting January 1, 2025, or later. Non-calendar year plans may continue to provide pre-deductible telehealth into 2025, but only through the run-out of the current plan year that started in 2024.
Next Steps With the end of the extension, HDHPs should now be amended so that any telehealth items or services (other than preventive) provided before the deductible is met are subject to cost-sharing. If the HDHP were to permit reimbursement for telehealth services before the deductible is met, the HDHP would not be HSA-qualified, and participants could not contribute to an HSA for that plan year. To address this, participants could be required to pay the fair market value (FMV) of the services (or managed care rates for discounted health services, if applicable) until the HDHP deductible is satisfied. Then once their HDHP deductibles have been satisfied, they can have access to free or low-cost medical benefits without jeopardizing their HSA eligibility.
Employers who intend to ensure that their employees remain HSA eligible during the 2025 plan year and beyond would want to consider making changes to their telehealth benefit offerings to preserve HSA eligibility. If further relief is not provided, the simplest solution may be to remove access to telehealth for those enrolled in the employer’s qualified HDHP. Alternatively, an employer could choose to charge FMV for a telehealth visit until the minimum HDHP deductible is met. Plan sponsors should contact their HDHP administrator to determine how they will address telehealth coverage now that the safe harbor has ended, and how communication to participants will be handled.
We expect this issue will again eventually be addressed in the next Congress, but in the meantime, the current extension expires for plan years beginning on or after January 1, 2025. We will keep our clients updated on efforts to restore the telehealth flexibility and any additional guidance from the administration or passed by Congress.
Should you have questions, contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.
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