Employee Benefits
Unveiling the Key Differences between Level Funded and Self Funded Plans
Discover the differences between level-funded and self-funded employee health insurance plans.
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The COVID-19 pandemic has made telemedicine a very popular and regularly utilized benefit. It seems that insurers will continue to offer telemedicine as a mainstream benefit; however, the interaction between telemedicine and Health Savings Accounts (HSAs) continues to be a concern—especially now that Open Enrollment is here.
To be eligible for an HSA, an individual must be enrolled in a qualified high deductible health plan (HDHP), and must not have any other disqualifying coverage. Disqualifying coverage is a plan or program that provides coverage prior to the minimum deductible being satisfied for an HDHP ($1,400 single / $2,800 family).
The Internal Revenue Service (IRS) and other regulatory agencies have never formally addressed whether telemedicine with no copay or a low copay constitutes disqualifying coverage. The CARES Act passed last year helped answer this question.
The CARES Act included language which provided flexibility for HDHPs to have a telemedicine benefit in place with no copay, or a low copay without it impacting HSA eligibility. This benefit could be provided prior to the minimum deductible being satisfied for an HDHP. This flexibility is available for plan years beginning on or before December 31, 2021.
This also tells us that under normal circumstances, many telemedicine programs eliminate HSA eligibility. Only certain telemedicine programs would preserve HSA eligibility—those that that apply the full cost of the telemedicine visit to the deductible or those that only provide preventive services.
For plans with effective dates or renewal dates on or after January 1, 2022, the flexibility for telemedicine and its interaction with HSAs is coming to an end. Employers, employees, and other individuals will need to be aware of this to determine any impact or change to HSA eligibility. It’s also possible that Congress revisits this to provide extended or permanent flexibility for telemedicine, HDHPs, and HSAs.
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