The telehealth services safe harbor for high deductible health plans (HDHPs) will expire for plan years starting on or after January 1, 2025. This means HDHPs paired with Health Savings Accounts will no longer be permitted to cover telehealth services before the statutory deductible is met. Absent conforming plan changes to HDHP policies, participants would be ineligible to make or receive HSA contributions.
Plan sponsors of HDHP plans will want to confirm the plan design change and advise plan participants of this coverage change.
Background
Prior to COVID, telehealth services were subject to HDHP deductibles, just like any other non-preventive healthcare services. However, the CARES Act included relief such that telehealth services could be paid for on a pre-deductible basis. The initial duration was set to expire for plan years beginning prior to January 1, 2022. However, that expiration date was extended to plan years beginning before January 1, 2025.
Extension Considered But Not Passed
An extension of pre-deductible telehealth coverage was considered by Congress, and many were hoping that it would pass in year-end spending legislation. However, while the provision was initially included in various bill drafts, it was ultimately dropped from the final version of the bill that was passed by Congress. (American Relief Act, 2025)
This means that the telehealth services safe harbor will not be available for plan years starting on or after January 1, 2025.
Why does this matter?
In short, it’s all about preserving the ability of participants to make HSA contributions. In order to make or receive HSA contributions, participants must be covered under a qualifying HDHP plan. The telehealth exemption provided a special exception to the normal rules for qualifying HDHP plans, allowing first dollar coverage. However, now that that exception has expired, coverage must conform to the standard rules for qualified HDHP plans.
If the underlying HDHP plan does not conform to the rules, participants would be ineligible to make or receive HSA contributions. Any contributions made while ineligible would need to be included in the participant’s taxable income and would be subject to a 10% excise tax.
What This Means for Plan Sponsors
Two important actions are required for plan sponsors with calendar year plans offering HDHP plans that were previously amended to include telehealth on a pre-deductible basis:
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Confirm Plan Design Change: Plan sponsors will need to confirm the plan design change with their insurer or TPA to ensure the deductible waiver will no longer be administered as of December 31, 2024 (for calendar year plans).
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Communicate to Participants: Plan sponsors will also need to communicate with plan participants the change in plan design for the HDHP plan. Participants need to understand that their HDHP plan will no longer provide first-dollar coverage for telehealth services.
