Telemedicine and COBRA

If there is one healthcare program that has benefited from COVID-19, that would seem to be telemedicine (sometimes called telehealth). Telemedicine can generally be described as the remote diagnosis and treatment of patients by means of telecommunications technology. It typically involves a person connecting with a doctor by phone or video chat to discuss a medical condition and determine a course of treatment.

Telemedicine eliminates face-to-face contact between a patient and a doctor. Social distancing, quarantines and stay-at-home orders have led to significantly increased utilization of telemedicine. Some telemedicine providers have reported utilization increases of 500% or more in 2020. Telemedicine now has a significant footprint in the way people receive healthcare services, and that trend is expected to continue post-pandemic.

Employers who provide a telemedicine benefit to employees should understand the impact of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to those programs. Telemedicine may be included as an underlying benefit of a health insurance plan. In these situations, the telemedicine benefit will automatically be included with any health insurance COBRA offering.

In other situations, telemedicine may be offered by employers as a stand-alone benefit which will be subject to COBRA if the program is considered a group health plan. Section 607 of the Employee Retirement Income Security Act of 1974 (ERISA) defines a group health plan as a plan which provides “medical care” to participants or beneficiaries directly, through insurance, through reimbursement or otherwise.

Medical care is defined in Section 213(d) of the Internal Revenue Code (the “Code”) as services provided for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

As a result of the definition of a group health plan under ERISA and the definition of medical care under the Code, most stand-alone telemedicine programs will likely be subject to COBRA. This means employers who are subject to COBRA should be fulfilling their compliance obligations for stand-alone telemedicine programs, including the distribution of Initial Notices and Election Notices at the appropriate times. Employees and/or their dependents will generally need be given the right to continue coverage under a stand-alone telemedicine program after a qualifying event has occurred.