Telehealth Coverage Exemption for High Deductible Health Plans Extended until 2025
On December 29, 2022, President Biden signed the SECURE 2.0 Act of 2022 (SECURE 2.0) into law as part of the Consolidated Appropriations Act of 2023 (CAA 2023). This legislation included a two-year extension of the telehealth coverage exemption for high deductible health plans (HDHPs). This extension means that HDHPs will be able to offer first-dollar coverage for telehealth services until December 31, 2024.
There is no doubt that the COVID-19 pandemic sped the adoption of telehealth services as a means of obtaining medical and mental health care. In March 2020, the CARES Act temporarily amended the rules relating to HSA contributions to provide that a participant with an HDHP could have first-dollar coverage for telehealth services and that this coverage would not disqualify the individual from making HSA contributions. A similar provision was included in last year’s omnibus government funding bill, the Consolidated Appropriations Act of 2022, that extended the telehealth exemption from April through December 2022.
SECURE 2.0’s telehealth coverage exemption provides flexibility to plan sponsors and HDHPs to choose to waive deductibles for telehealth or other remote care services without causing participants to lose eligibility to contribute pre-tax funds to health savings accounts (HSAs). Ordinarily, eligibility to contribute to an HSA requires that the participant be covered under an HDHP and have no disqualifying coverage. Without this exemption, first-dollar coverage of telehealth services is considered disqualifying coverage (absent some other specific exemption) and would prevent participants from making or receiving pre-tax contributions to their HSAs.
With many insurance carriers now offering embedded telehealth services in health plans and with an increase in stand-alone telehealth service providers, the SECURE 2.0 telehealth coverage exemption permits employers to provide employees with additional methods of accessing healthcare in 2023 and 2024. While it remains to be seen whether this exemption will continue after December 2024, there is certainty for the next two years.