By: Kelly Dempsey, Esq.

It’s not the news any of us wanted to hear, but 2025 has arrived with no extension to the telehealth services safe harbor for high deductible health plans that are HSA-qualified. As such, the safe harbor officially expires for plan years starting on or after January 1, 2025. There were numerous reports that an extension was included in early drafts of the bill to keep the government funded in December, but the bill passed and signed by President Biden on December 21, 2024, did not include this extension. 

This safe harbor was originally created by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed way back in 2020 and additional legislation enacted throughout 2022 extended the safe harbor for plan years starting before January 1, 2025.

Plan sponsors who have offered HDHPs in conjunction with HSAs will no longer be allowed to cover telehealth services before the deductible is met. Should a plan allow reimbursement for telehealth services prior to the deductible being met, the HDHP would not be HSA-qualified; consequently, participants could not contribute to an HSA for that plan year. Plans that violate IRS HSA-qualified HDHP rules can expose both the plan and plan participants to tax consequences.

What’s a plan to do now? Unfortunately, the answer is to update (via amendment or restatement) plan provisions. Plans will need to update their SPD/PDs accordingly at the first plan renewal beginning on or after January 1, 2025. HSA-qualified HDHPs will need to ensure that telehealth services under an HDHP apply to the deductible at the first plan year beginning after January 1, 2025, unless the service is for an ACA-mandated preventive benefit (i.e., a telehealth visit to obtain a prescription for a preventive service).

We know there is a lot of bipartisan support for making this a permanent rule, thus this issue may be taken up in the next Congress, but only time will tell.