In 2020, the federal government enacted temporary relief excluding telemedicine as disqualifying other health coverage (“disqualifying coverage”) when provided in conjunction with a high deductible health plan (HDHP). This relief broadly preserved participant eligibility for health savings account (HSA) contributions and allowed employers to offer telemedicine with a $0 copayment in conjunction with HDHPs.
The government extended this relief twice, with the most recent extension occurring as part of the Consolidated Appropriations Act, 2023 (CAA 2023). The CAA 2023 extension applies to HDHP plan years beginning after December 31, 2022 and before January 1, 2025, which means it does not apply to HDHP plan years beginning in 2025. Despite multiple attempts in 2023 and 2024, Congress failed to pass legislation providing further relief before adjourning on December 21, 2024. As a result, most general telemedicine coverage will become disqualifying coverage for HSA contribution eligibility purposes again for HDHP plan years beginning on or after January 1, 2025.
This alert summarizes the expiring telemedicine relief under the CAA 2023, the prospects and timing for further relief, and employer considerations. We will also summarize why telemedicine is generally disqualifying coverage and address how the loss of relief may affect certain other virtual health benefits. This alert is relevant for all employers offering or considering offering general telemedicine coverage in conjunction with an HDHP plan year beginning in 2025.
