Written by Shawn Hughes, EVP Client Retention

Telemedicine has quickly become an essential part of healthcare, offering convenient and affordable access to care. Before the pandemic telemedicine was not universally accessible or widely embraced. While telemedicine was certainly present, it hadn’t yet reached its full potential, and was largely seen as an “add-on” rather than a transformative solution to improving healthcare accessibility and efficiency. It was often limited by strict regulations and insurance restrictions. This was especially the case for individuals enrolled in Health Savings Accounts (HSAs) and High-Deductible Health Plans (HDHPs), as there wasn’t a way to receive telehealth services without impacting their deductibles or incurring standard co-payments or having to pay for telehealth services out-of- pocket. That all changed with the onset of the pandemic, which rapidly accelerated the adoption and mainstreaming of telemedicine, transforming it from a niche service into a cornerstone of modern healthcare delivery. The ability to access telemedicine without extra cost has played a crucial role in helping many individuals save on healthcare expenses.

Providing Access to Medical Care Without Financial Burden
During the COVID-19 pandemic, the federal government issued guidance that allowed those with HSAs and HDHPs to take advantage of telehealth consultations without the usual cost-sharing requirements, thus enabling them to avoid more expensive in-person doctor visits. This was a significant shift, as it meant individuals with HSAs and HDHPs could access medical consultations remotely without the financial burden of meeting their high deductible first or paying out-of-pocket for the service. It also helped reduce the pressure on healthcare facilities during the pandemic, enabling people to seek care from home and avoid crowded clinics or hospitals. The guidance addressed an immediate need for healthcare access during a time of crisis, ensuring that telemedicine could be utilized as a primary form of care without creating additional financial barriers for patients.

However, this benefit was granted as a temporary measure during the pandemic. Since the benefit expired on December 31, 2024 the future of telemedicine coverage for HSAs and HDHPs is uncertain. This change comes after Congress removed a previously included extension in the most recent continuing resolution act, leaving many plan sponsors and participants wondering about their next steps.

The Pre-Pandemic Landscape: Carved-Out Telemedicine Solutions
Before the pandemic, telemedicine existed primarily as a “carved-out” benefit, with many employers offering telehealth as a separate, fixed-fee service that didn’t interfere with the tax-advantaged status of HDHPs. While this structure was beneficial, telemedicine was still considered an additional service rather than an integral part of a health plan.

For those with HSAs or HDHPs, telemedicine consultations were often subject to the same high deductible as in-person visits. This meant that individuals often had to pay out-of-pocket until their deductible was met, making it a less attractive option. The cost of telemedicine services also varied, with consultations ranging from $40 to $150 or more, depending on the insurer and provider. Additionally, some telehealth services—like mental health consultations or specialized care—were either excluded or covered only under specific circumstances.

What’s Changing as of January 1st?
As of January 1, 2025, the temporary relief allowing free telemedicine consultations for HSAs and HDHPs will expire. This means that telemedicine services may once again be subject to deductible requirements when used with HDHPs. The government could extend or reinstate this relief, but currently, there’s no official word on that.

This change leaves employers and employees in a state of uncertainty, particularly as Congress removed the extension in the most recent continuing resolution. The expiration of this relief could lead to increased costs for employees if telemedicine services are once again subject to deductible requirements or co-pays.

What Does This Mean for Employers and Employees?
With the expiration of temporary relief, employers and employees with HSAs and HDHPs may face new challenges in navigating telemedicine coverage. Here are some potential adjustments employers might need to make:

• Add Co-pays: Employers may introduce co-pays for telemedicine services to align with IRS guidelines for HDHPs.
  Implement Fair Market Value Co-pays: Some employers may choose to implement co-pays based on fair market value, which could help maintain the qualified status of the HDHP. This approach is still somewhat vague, but it may offer protection against future audits.
• Wait for Final Guidance: Employers may opt to wait for clearer regulatory guidance before making any changes. However, employees using free telemedicine under HDHPs could face tax consequences if the plan is audited after the new year, with HSA contributions potentially subject to standard income tax.

BSI’s Approach and Future Outlook
At BSI, we’re closely monitoring these changes and are committed to keeping our clients informed as the situation evolves. We anticipate that when more definitive guidance is issued, there will be time for employers to adjust their plans and avoid retroactive penalties.

As always, we encourage employers and plan sponsors to stay up-to-date with regulatory changes and consult with benefits advisors to ensure their health plans remain compliant and continue to meet the needs of their employees.

A New Chapter in Telemedicine
While the future of telemedicine for HSAs and HDHPs remains uncertain, one thing is clear: telemedicine is no longer just an “add-on” service but a key part of healthcare’s future. Whether you’re an employer, an employee, or a healthcare provider, the evolution of telemedicine offers opportunities for greater access to care—and challenges that require careful attention. As we navigate these changes, staying informed will be crucial to ensuring that telemedicine continues to offer a valuable, accessible, and cost-effective solution for all.