Background

The telehealth safe harbor for HSA-qualified HDHPs was originally created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). As we discussed in our March 30, 2020 insight, the CARES Act permitted HDHPs to cover telehealth or other remote-care services before the plan’s deductible is met, effective on March 27, 2020 for plan years beginning on or before December 31, 2021.

Legislation enacted in March 2022 extended this flexibility from April 1, 2022 through December 31, 2022. (See our March 22, 2022 insight) Subsequent legislation further extended the telehealth flexibility for plan years beginning after December 31, 2022, and before January 1, 2025. (See our January 5, 2023 insight.)

The latest congressional activity

President Biden signed the American Relief Act of 2025 on December 21, 2024. The law funds the government through March 14, 2025, and provides disaster relief appropriations and economic assistance to farmers. However, the bill does not include an extension of HDHP telehealth flexibility.

Congressional leadership had originally negotiated a bipartisan bill that would have extended the HDHP telehealth flexibility rule for an additional two years. In addition, the bipartisan healthcare deal would have extended Medicare telehealth flexibilities (discussed in our March 10, 2020 insight), which will now expire March 31, 2025.

The original deal also included significant pharmacy benefit manager (PBM) reforms, including transparency requirements to report data to plan sponsors, mandating that ERISA plan contracts contain a 100 percent pass-through of rebates, a ban on spread pricing in Medicaid and modifying PBM compensation from Part D rebates, as well as changes to hospital billing practices.

Implications for sponsors of HDHPs with HSAs

Sponsors of HDHPs that have HSAs with plan years beginning before January 1, 2025 may continue to reimburse individuals for telehealth services before the deductible for the remainder of that plan year. However, for HDHPs with a plan year of January 1, 2025 or later, plans may not reimburse individuals for telehealth services before they meet their deductible. If a plan permits reimbursement for telehealth services before the deductible is met, the HDHP would not be HSA-qualified, and therefore participants could not contribute to an HSA for that plan year.

Consequently, plans should assure that telehealth services provided before the deductible is met in an HDHP are subject to cost-sharing, unless the service is for a preventive benefit required under the ACA (e.g., a telehealth visit to obtain a prescription for a preventive service).

Telehealth services continue to be a popular benefit. Plan sponsors should contact their health plan administrator to determine how they will implement telehealth benefits in an HDHP and whether they will be communicating changes to plan participants. In some cases, plan documents may need to be amended concerning telehealth coverage.

Looking ahead

It is possible that the telehealth provision could be revived in the new Congress, although it is likely those efforts would take several months.

It is also likely that PBM reforms and other provisions in the healthcare bill will be discussed in the next Congress.

However, it is unclear when or whether there will be action on the proposed legislation. Plan sponsors should monitor developments on this issue in the next Congress.