Does a Stand-Alone Telehealth Benefit Affect Your HSA Eligibility?

Telemedicine can be covered below the deductible now. But what about the future? And what about a stand-alone plan?

When Congress passed the law creating Health Savings Accounts and HSA-qualified medical plans in 2003, telemedicine didn't exist. Sure, occasionally a parent would call a pediatrician's after-hours answering service for help with a crying baby. But the idea that medical care could be delivered by phone was fantasy, a concept that not even The Jetsons could access in their futuristic world.

Fast forward two decades and most Americans carry a powerful personal computer, disguised as a phone, in their pocket or purse. Technology companies have developed platforms to enable video phone call. And a global pandemic has necessitated that physicians, behavioral-health practitioners, and other providers of medical care adapt to a virtual diagnose-and-treat model of care.

But how does virtual care affect a patient's eligibility to open and fund a Health Savings Account?

History

More than a decade ago, I attended an open-enrollment meeting to introduce employees to their new Health Savings Account program. After I finished, the benefits advisor introduced the representative of a new company that offered audio telemedicine visits to diagnose and treat simple medical common conditions. The service was available to all employees without their paying a monthly fee or a charge per call.

I pulled the broker aside and said that employees who enrolled in the Health Savings Account program would lose their eligibility to open and fund an account by merely having access to this benefit. Federal tax law doesn't allow any services except select preventive care to be covered below the deductible. This telemedicine plan constituted a separate medical plan in which all employees eligible for benefits were enrolled. This plan disqualified them.

The broker invited the telemedicine rep over to join the discussion. He said he'd heard this concern before but not to worry, since his company's offering was a program, not coverage. I explained that it could be called a program, coverage, or a pink elephant. The label didn't matter. The plan provided non-preventive medical care below the deductible. It was disqualifying.

I don't know how the company eventually resolved this issue. Since then, though, many insurers have contracted with telemedicine companies to offer these services as part of the benefits package. HSA-qualified plans are designed to apply virtual visits to the deductible until the patient has satisfied the deductible, at which point additional telemedic9ine visits can be covered as the employer chooses.

The Landscape Today

The Covid-19 pandemic led Congress to relook at telemedicine for both Medicare (which didn't cover this form of treatment prior to 2020) and HSA-qualified plans. Congress passed temporary legislation allowing Medicare to offer this benefit and permitted HSA-qualified plans to cover (e.g., pay some of or all the cost of) virtual visits below the deductible.

The HSA-qualified plan provision ended for coverage through plan years that started Jan. 1, 2022, or later. Congress extended the permission for plan years beginning April 1, 2022, which created up to a three-month gap for plans that renewed during the first three months of 2022. Those plans couldn't cover telemedicine visits below the deductible before April 1.

That provision ended Dec. 31, 2022, regardless of the plan year. Congress acted again, allowing plans that renewed Jan. 1, 2023, to cover all telemedicine visits below the deductible. But it created another gap for plans whose 2023 renewal date wasn't Jan. 1. They can't cover any 2023 telemedicine visits below the deductible until the date that the plan renews in 2023, thereby creating up to a 363-day gap during which telemedicine visits must be applied to the deductible.

Stand-alone Telemedicine Visits

Some employers still offer a telemedicine visits independent of the medical plan. Why? Here are several possible reasons:

• They don't, for whatever reason, like the plan that their insurer offers, or, in rare cases, their insurer doesn't offer the benefit.
• They want to extend this benefit to all employees, including workers who aren't eligible for benefits (like part-timers and new hires in their waiting period before qualifying for benefits) and employees who are covered through their spouses or are enrolled in Medicare.
• They want to support a local hospital or physician group that offers this service. They may just want to support a local business, or perhaps this plan includes easy access to the network's local urgent-care centers or after-hours physicians for illnesses or injuries that can't be effectively diagnosed or treated virtually.

These plans must follow the same rules as virtual-medicine benefits integrated into the medical plan. If the date of service falls outside the ranges that Congress permitted coverage below the deductible, these plans must charge a market price to employees and dependents who want to open and fund a Health Savings Account. The market price must be reasonable. For example, a $10 charge per call wouldn't pass this test. whereas a $59 charge would more easily meet the standard.

What Does the Future Hold?

Free-standing telemedicine programs are wrapped into the Covid-related provisions that Congress enacted. Translation: Any telemedicine services beginning with the 2023 effective date through the end of 2024 won't disqualify an otherwise-qualified employee or covered dependent from opening and funding a Health Savings Account. But the law creates that same gap at companies whose telemedicine plan renews after Jan 1 this year, namely that the plan disqualifies covered employees and dependents until their 2023 renewal date.

Example: A company renews its telemedicine plan effective with its June 1, 2023, renewal of other employee benefits. Employees covered by the telemedicine plan are disqualified from funding a Health Savings Account for the months of January, February, March, April, and May. They may use the Last-Month Rule to contribute more than 7/12 of the maximum in 2023.

The world begins anew Jan. 1, 2025, absent further action by Congress. Unless telemedicine benefits are permitted to be covered below the deductible, all such services - whether integrated into the medical plan or offered as a free-standing benefit - must charge a market price and be applied to the deductible of the medical plan or the independent telemedicine benefit.

The Bottom Line

Telemedicine has opened new doors for diagnosis and treatment, particularly for patients with transportation challenges, those living far from providers, and those who need regular contact with a provider (particularly mental-health services or management of a chronic condition) who find it difficult to schedule time to travel to and from in-person visits. Patients, their employers, their benefits advisors, and their insurers must continue to monitor the legislative landscape to ensure that access to these services below the deductible doesn't disqualify otherwise-qualified individuals from opening and funding a Health Savings Account.

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