Employers and health-care organizations are pushing Congress and the IRS to waive deductible requirements for telehealth services for 32 million people with some employer-sponsored plans.
An emergency Covid-19 policy expired Dec. 31 that enabled people with high-deductible plans and health savings accounts (HSAs) to get telehealth coverage without first having to meet annual deductibles. Some people who had been receiving care at little or no cost by computer or telephone are now receiving bills.
“They’re unhappy, and they are expressing that to their company and to their insurers,” said James Gelfand, executive vice president of public affairs for the ERISA Industry Committee (ERIC), which represents large companies that sponsor employee health plans. “They don’t understand that it was the federal government that did this to them.”
The now expired provision in the the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 (P.L. 116-136) waived a requirement that people who have high-deductible plans coupled with tax-friendly health savings accounts must meet their minimum out-of-pocket payment threshold before their insurance can cover telehealth. In addition to tax savings and lower premiums, these types of plans can prompt enrollees to shop for more efficient health-care services since they are responsible for their initial health care costs.
The expiration of the benefit comes as the omicron variant of the virus is spreading. Employers and telehealth providers are calling for extended or permanent enactment of telehealth coverage policies to make it easier for people to use “virtual” care.
If patients have to pay for telehealth visits until they meet their deductibles, as required by tax law, they may delay care and incur greater costs later if illnesses are not treated. They could also contract Covid if they have to make unnecessary in-person visits, advocates argue.
‘First Line of Defense’
“Telehealth can be your first line of defense to make sure employees are making well-founded decisions on whether to seek in-person care,” Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions (NAHPC), said. “This is a good example where the pandemic allowed good policy to move forward, and we shouldn’t lose the gains that have been achieved as a result of that.” The NAHPC represents groups that aid businesses that sponsor health care coverage for employees.
More than 125 organizations sent a letter to congressional leaders Jan. 21 urging quick retroactive reinstatement of the CARES provision. According to a survey by the Employee Benefit Research Institute, about 96% of employers adopted pre-deductible coverage for telehealth services as a result of the CARES Act provision.
But rather than wait for Congress to act, employer groups and some lawmakers are also asking the Biden administration to issue policies guaranteeing that employers would not face enforcement of the tax law for covering telehealth services.
Steel and Lee introduced legislation in the House (
The Treasury Department wouldn’t comment on the issue.
The Affordable Care Act requires all plans, including high-deductible health savings account plans, to offer preventive care without charging enrollees. This is called “first dollar coverage.” But other services must be paid for by enrollees until annual deductibles are met. In 2022, annual deductibles are set at $1,400 for individuals and $2,800 for families under these types of plans.
The CARES Act provided an exception allowing high-deductible plans to temporarily cover telehealth either without a deductible or with a deductible below the minimum required by law.
Running afoul of the deductible rules “carries with it great risk,” Sage Fattahian, a partner with Morgan, Lewis & Bockius LLP who counsels clients on health and welfare plans, said. “If they offer this first-dollar coverage to individuals, they blow up HSA eligibility and the individuals are no longer eligible to make HSA contributions,” she said.
Health savings accounts allow plan participants to save money on a tax-favored basis to pay their out-of-pocket costs. To qualify for a health savings account, enrollees have to be covered under a high-deductible plan without any other major medical health coverage.
“Employers are complying because the risk of not complying is critical to their participants and they don’t want to jeopardize that HSA eligibility,” Fattahian said. Many employers announced during open enrollment last fall that plans would revert to the former telehealth rules without an extension of the CARES Act provision, she said.
“Unfortunately what that does is it drives down utilization” of health-care services, Fattahian said. “It really hampers employers from providing efficient, cost-effective health care to their participants, particularly while we’re still in this period of public health emergency.”
“For many families, a high-deductible plan essentially operates like catastrophic coverage, because they can’t meet the deductible,” Krista Drobac, the executive director of the Alliance for Connected Care, said. The Alliance is a telehealth advocacy group.
During the pandemic, people with those plans were able to receive primary care and mental health through telehealth without first having to meet their annual deductible, Drobac said. “It had an impact on access to care,” she said.
Removal of Benefits
“It’s hard to tell” if employers who continue to offer first-dollar coverage for telehealth are currently running afoul of the law, Adam Solander, a partner in the Washington office of King & Spalding who works on health-care benefits, said. “It’s such a gray area. It’s really putting employers in a terrible position. They have to potentially remove benefits from people in the midst of the pandemic.” he said.
“Employers are worried about their workforce and believe that they need to remove impediments to things that may provide access to care for individuals who may be at home, may be in rural areas, may be underserved,” Solander said.
“A lot of large employers are confused by this,” Solander said. “They could be prevented here from doing what they believe is the right thing for their populations, and things that not only provide care but probably save them money.”
Solander believes the Internal Revenue Service has the legal authority to extend the protections provided under the CARES Act. “There are interpretations that could be made that could categorize these services, provide a pathway to make sure that people get this care. But really I see this more as a policy issue. I think what you’re potentially doing here is creating a public health crisis or worsening the public health crisis that we currently have.”
Not allowing telehealth coverage on a first-dollar basis will remove access “to a lot of people,” he said.
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