Telehealth Relief Extension for HDHPs Expires

Plan sponsors that offer high-deductible health plans paired with health savings accounts will no longer be permitted to cover telehealth services before a participant’s deductible is met. This is because Congress failed to include extension of the safe harbor allowing this benefit in the American Relief Act of 2025—the law that passed on December 21, 2024, to fund the federal government for the next few months.

The legislation had initially included an extension of the telehealth service exception, but this extension was not included in the final version of the law. As a result, for calendar year plans, the exception expired on December 31, 2024.

Congressional leadership had originally negotiated a bipartisan bill that would have extended the HDHP telehealth flexibility rule for an additional two years, and it would have extended Medicare telehealth flexibilities, which will instead expire on March 31, 2025.

According to Segal, the original deal also included significant pharmacy benefit manager reforms, including transparency requirements to report data to plan sponsors, mandating that Employee Retirement Income Security Act plan contracts contain a 100% pass-through of rebates, changes to hospital billing practices and more.

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

Subsequent legislation extended the telehealth flexibility for plan years beginning after December 31, 2022, and before January 1, 2025.

The Wagner Law Group wrote in a law alert on Thursday that employers should amend their HDHPs and provide information to reflect this change, as well as work closely with qualified benefits advisers to ensure their plans continue to comply with the law.

At the same time, it is possible that the 119th Congress, which began work on January 3, will retroactively reinstate the telehealth exception, but this could take several months.

President-elect Donald Trump has been outspoken about “knocking out the middlemen” in the U.S. drug industry and cracking down on pharmacy benefit managers. The first Trump administration attempted PBM reform through the Department of Health and Human Services’ OIG Rebate Rule, as well through policy enacted in the Consolidated Appropriations Act of 2021.

While the rebate rule was withdrawn under the administration of President Joe Biden, the incoming Trump administration could revisit these efforts.