The Telemedicine Safe Harbor Has Expired. What Now for HSA-Qualified Medical Plans?
By William G. (Bill) Stuart | Originally posted on Health Savings Academy
A safe harbor provision that made virtual visits more accessible has expired. What's the future of telemedicine on HSA-qualified plans?
As the congressional holiday recess loomed in mid-December, Congress hadn't passed a budget for the 2025 fiscal year, which began Oct. 1, 2024. This delay isn't unusual, as Congress after Congress has repeatedly failed in recent years to pass a budget before the beginning of the new fiscal year.
Shortly before the most recent deadline just before Christmas, Republicans and Democrats in the House and Senate agreed to a continuing resolution to permit the federal government to continue to spend money. That continuing resolution contained some policies beyond the budget alone, including a two-year extension of the safe harbor for telemedicine. The safe harbor permits insurers and employers to cover virtual medical visits below the deductible on an HSA-qualified plan without disqualifying anyone covered by the plan from opening and funding a Health Savings Account.
At the 11th hour, however, the incoming Trump Administration forced through a different continuing resolution consisting of a straight continuation of spending authority with no policy changes. The extension of telehealth services below the deductible didn't survive this change.
So, now what?
History of the Telemedicine Safe Harbor
Most physician offices closed in the early months of the pandemic for obvious reasons - the risk of contracting this not-well-understood virus appeared to present a greater risk for patients than the loss of personal contact with a medical professional. Also, the policy protected medical professionals from the risk of exposure. Finally, in some cases, cancelling visits freed up doctors and nurses to treat patients who contracted Covid-19.
In response, Congress added a provision in early pandemic legislation permitting insurers to cover virtual visits at no cost sharing on all plans, not just HSA-qualified coverage. Congress twice extended this safe harbor, though each time it left small gaps in the safe harbor due to general lack of understanding of the insurance business.
The Current Telemedicine Safe Harbor
The current safe harbor permits insurers and employers to cover telemedicine services below the deductible on any plan that renews before Dec. 31, 2024.
Example 1: The Orient Express, a drive-through Chinese restaurant, renewed its HSA-qualified plan effective Nov. 1, 2024. Employees and their dependents covered on the plan can continue to access virtual care with no cost sharing through Oct. 31, 2025.
Example 2: Brocket's Sprockets, a high-end bicycle retailer, renewed its coverage effective Jan. 1, 2025. Because the plan renewed after Dec. 31, 2024, telemedicine services are applied to the deductible. Patients are responsible for paying the full contracted rate until the plan deductible is satisfied, at which point the insurer can impose whatever cost sharing - no patient responsibility, a copay, coinsurance - that the company selects.
Thus, during calendar 2025, some patients will receive telemedicine care below the deductible (with no cost sharing, a copay, or coinsurance) and others will pay the full contracted rate until they satisfy the plan deductible.
A Telemedicine Benefit Itself Isn't Disqualifying
Insurers and employers can continue to offer virtual medicine visits on HSA-qualified plans without disqualifying covered individuals from opening and funding a Health Savings Account. What's changed is that on plans that renew after Dec. 31, 2024, telemedicine services must be applied to the deductible.
Example: Gabriele has a standing biweekly session with her behavioral health therapist. The visits were covered in full in 2024. Her plan renewed on Jan. 1, 2025. Those same visits are now applied to the deductible, and Gabriele is responsible for the $47 contracted rate for each visit until she satisfies her deductible.
Gabriele can still visit with her provider virtually, contribute to her Health Savings Account (if she's otherwise HSA-eligible), and pay her portion of the bill (the full contracted rate until she satisfies the plan deductible) with her accumulated Health Savings Account balance.