First-Dollar Telehealth Now Okay for High Deductible Health Plans

Congress acted in late 2022 to preserve some of the emergency rules implemented to fight the COVID pandemic. One such rule, which allows high deductible health plans (HDHPs) to offer first-dollar coverage for telehealth, was passed and signed into law as part of the Consolidated Appropriations Act. It offers relief to untold numbers of HDHP subscribers across the country.

The new rule specifically affects HDHPs that are combined with health savings accounts (HSA). Prior to the special rules enacted in 2020, HSA-qualifying HDHPs were not allowed to cover any services – with the exception of a few preventative services – until a subscriber had reached their deductible limit. The CARES Act changed the rules by allowing first-dollar coverage for telehealth.

It is Only Temporary

Allowing first-dollar coverage was set to expire at the end of 2022. By including the new provision in the Consolidated Appropriations Act, Congress has kept the telehealth relief intact. However, the new rule has not been permanently codified.

Congress did not enact a change that keeps the rule intact forever. It is only temporary, and, in fact, it expires at the end of 2024. That means Congress will have to go through the entire exercise again prior to January 1, 2025.

At least for now, people who subscribe to an HDHP can get first-dollar coverage for telehealth services. What does that mean? It means that, if their plans offer to cover telehealth services separate from the subscriber’s deductible, the subscriber will not pay anything out-of-pocket for such services, with the possible exception of a copay.

Effective With the New Plan Year

BenefitMall, a Dallas-based general agency representing more than 100 carriers and thousands of benefits brokers, explains that employers wanting to offer first-dollar telehealth coverage must wait until the start of the new plan year, if their existing plans do not offer it currently.

For example, an employer’s HDHP may not have offered first-dollar coverage in 2022. But the employer’s new plan year does not begin until March 2023. Even though the rule change went into effect January 1, the company cannot start offering first-dollar coverage until March 1. In addition to this, the company must make sure it updates all its policy documents prior to the start of a new plan year.

The question for many companies that offer HDHPs is why they would also need to offer first-dollar coverage for telehealth. After all, HDHPs are often chosen because they are a less costly option for employer and employee alike. Offering first-dollar coverage for telehealth then would only add to the employer’s cost, right? Perhaps so in the immediate short term.

On the other hand, though, offering first-dollar coverage may encourage more employees to utilize telehealth services for both preventative and primary care. This would theoretically lead to better overall health and lower employer costs as well.

A Nice Benefit for Now

Whether or not employers save money by offering first-dollar telehealth coverage remains to be seen. For now, anyway, it is a nice benefit to HDHP subscribers whose plans offer it. It should be noted that employers are not required by the new rule to provide first-dollar coverage. It is completely optional. The point of the new rule was simply to make the practice allowable.

Hats off to Congress for extending the telehealth rule for another two years. But really, would it not be better if Washington just got out of regulating how people pay for healthcare services? If there weren’t so many rules in place, it would all be easier – and potentially cheaper at the same time.

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