With continually-rising health benefits costs, more and more employers are looking to High Deductible Health Plans as a way to mitigate their rising expenses. Unfortunately this change in plan design means that the employees are left with an increased exposure for out-of-pocket costs related to the higher deductibles. Many employees are more familiar with the flat dollar copay that is common with a traditional insurance plan. Employers therefore frequently lessen the pain of the higher out-of-pocket costs by offering contributions to tax vehicles such as Health Savings Accounts.

Many individuals who participate in a high deductible health plan (HDHP) also have the option to make pretax contributions to a health savings account (HSA). Funds in the HSA can then be used to pay for medical expenses. There are a lot of rules about Health Savings Accounts (HSAs) because of the tax breaks associated with them. To be able to make HSA contributions, therefore, the health plan member cannot have any “disqualifying coverage”.

Disqualifying coverage includes any health coverage that provides a benefit (other than preventive care) before
the HDHP deductible is met, often termed “first dollar benefits”. A telemedicine benefit could count as disqualifying coverage, for example, if the employer pays a portion of the cost of a telemedicine consultation, or the participant pays less than fair market value for access to the consultation, before meeting the HDHP deductible. As such, employers that sponsor HDHPs will want to consider the implications for HSAs if they decide to provide a telemedicine benefit.

Does using Telemedicine Disqualify You from Contributing to an HSA?

Telehealth/Telemedicine Telehealth services are live, interactive audio and visual transmissions of a physician-patient encounter from one site to another using telecommunications technology. They may include transmissions of real-time telecommunications. Telemedicine is typically far less expensive than an office visit — for both the patient and the insurance company. In fact, there’s no copay for telemedicine, making it an attractive option for those with copays on the higher end of the spectrum (especially for specialists) or for those who might be tight on cash. Telehealth and telemedicine provide virtual health care with a provider. Your benefits may have slightly different coverage for telehealth and telemedicine. Telehealth with your doctor: Many of your doctors may offer telehealth services via telephone, video, or e-mail. If you don’t know if your doctor(s) offers telehealth services, simply. Due to the Coronavirus (COVID-19) Public Health Emergency, doctors and other health care providers can use telehealth services to treat COVID-19 (and for other medically reasonable purposes) from offices, hospitals, and places of residence (like homes, nursing homes, and assisted living facilities) as of March 6, 2020. Coinsurance and deductibles apply, t hough some healthcare providers are.

First, it is important to differentiate between two questions:

1. CAN YOU OFFER A TELEMEDICINE PLAN ALONGSIDE AN HSA?
2. CAN YOU PAY FOR A TELEMEDICINE PLAN USING HSA FUNDS?

Learn how Telemedicine Benefits Small Employers
To answer the first question, it is important to know that a telemedicine plan is not insurance. Also, telemedicine plans are not intended to replace your primary care physician or treat chronic or emergency conditions.

Because the limitations to HSAs apply to insurance programs that cover all out of pocket expenses, the first dollar coverage stipulation shouldn’t apply, but opinion among many insurance professionals varies on this interpretation. AllyHealth recommends that if you’re interested in this approach, you consult your insurance broker, consultant, or attorney for a more formal interpretation of this issue.

So, yes, you should be able to offer a telemedicine plan along with an HSA, but confirm this with your advisors.

The second question is a bit trickier and really depends on how your plan is designed. The regulations around HSAs like to see a direct correlation between money spent and services received. They don’t like money being spend on a program that gives you the right to use it, but rather, they like money being spent in a manner that you can see money going out in direct exchange for services coming in.

AllyHealth’s telemedicine service is designed with no copay for unlimited consults.

So, with that setup, you are paying for the right to use the service, rather than paying for each particular use (as you would with a copay). There is not a strict dollar out, services received relationship.

As a result, you cannot use your HSA funds to pay for the monthly membership for AllyHealth’s telemedicine plans, since it is set up without a copay requirement.

Telemedicine Copays

As a general rule, you cannot pay for a monthly telemedicine service with an HSA, but if your plan is set up where you have a copay for a consultation, you can pay that copay with HSA funds. For this reason, AllyHealth can offer pay-per-consult telemedicine plans for customers that feature qualified high-deductible health plans and health savings accounts. This way, they can take advantage of the exciting cost-savings potential of telemedicine but remain compliant.

Other Considerations About HSA’s and Telemedicine

The amount of money that is saved by each employee by not having to pay for doctors visits, even paying with pre-tax money, is much greater than the amount they save by having that money be tax-exempt. So, it’s much better for an employee to have to contribute less money to their HSA because they don’t need as much, than it is for them to contribute more, just because it’s tax-exempt.

While this is tricky, and we aren’t lawyers, we are confident that these guidelines are correct. As always, if you have any questions, you’re welcome to contact us.

By Jay Hancock, Kaiser Health News

Karen Taylor had been coughing for weeks when she decided to see a doctor in early April. COVID-19 cases had just exceeded 5,000 in Texas, where she lives.

Cigna, her health insurer, said it would waive out-of-pocket costs for “telehealth” patients seeking coronavirus screening through video conferences. So Taylor, a sales manager, talked with her physician on an internet video call.

The doctor’s office charged her $70. She protested. But “they said, ‘No, it goes toward your deductible and you’ve got to pay the whole $70,’” she said.

Policymakers and insurers across the country say they are eliminating copayments, deductibles and other barriers to telemedicine for patients confined at home who need a doctor for any reason.

“We are encouraging people to use telemedicine,” New York Gov. Andrew Cuomo said last month after ordering insurers to eliminate copays, typically collected at the time of a doctor visit, for telehealth visits.

But in a fragmented health system — which encompasses dozens of insurers, 50 state regulators and thousands of independent doctor practices ― the shift to cost-free telemedicine for patients is going far less smoothly than the speeches and press releases suggest. In some cases, doctors are billing for telephone calls that used to be free.

Patients say doctors and insurers are charging them upfront for video appointments and phone calls, not just copays but sometimes the entire cost of the visit, even if it’s covered by insurance.

Despite what politicians have promised, insurers said they were not able to immediately eliminate telehealth copays for millions of members who carry their cards but receive coverage through self-insured employers. Executives at telehealth organizations say insurers have been slow to update their software and policies.

“A lot of the insurers who said that they’re not going to charge copayments for telemedicine ― they haven’t implemented that,” said George Favvas, CEO of Circle Medical, a San Francisco company that delivers family medicine and other primary care via livestream. “That’s starting to hit us right now.”

One problem is that insurers have waived copays and other telehealth cost sharing for in-network doctors only. Another is that Blue Cross Blue Shield, Aetna, Cigna, UnitedHealthcare and other carriers promoting telehealth have little power to change telemedicine benefits for self-insured employers whose claims they process.

Such plans cover more than 100 million Americans — more than the number of beneficiaries covered by the Medicare program for seniors or by Medicaid for low-income families. All four insurance giants say improved telehealth benefits don’t necessarily apply to such coverage. Nor can governors or state insurance regulators force those plans, which are regulated federally, to upgrade telehealth coverage.

“Many employer plans are eliminating cost sharing” now that federal regulators have eased the rules for certain kinds of plans to improve telehealth benefits, said Brian Marcotte, CEO of the Business Group on Health, a coalition of very large, mostly self-insured employers.

For many doctors, business and billings have plunged because of the coronavirus shutdown. New rules notwithstanding, many practices may be eager to collect telehealth revenue immediately from patients rather than wait for insurance companies to pay, said Sabrina Corlette, a research professor and co-director of the Center on Health Insurance Reforms at Georgetown University.

“A lot of providers may not have agreements in place with the plans that they work with to deliver services via telemedicine,” she said. “So these providers are protecting themselves upfront by either asking for full payment or by getting the copayment.”

David DeKeyser, a marketing strategist in Brooklyn, New York, sought a physician’s advice via video after coming in contact with someone who attended an event where coronavirus was detected. The office charged the whole visit — $280, not just the copay ― to his debit card without notifying him.

“It happened to be payday for me,” he said. A week earlier and the charge could have caused a bank overdraft, he said. An email exchange got the bill reversed, he said.

With wider acceptance, telehealth calls have suddenly become an important and lucrative potential source of physician revenue. Medicare and some commercial insurers have said they will pay the same rate for video calls as for office visits.

Some doctors are charging for phone calls once considered an incidental and non-billable part of a previous office visit. Blue Cross plans in Massachusetts, Wyoming, Alabama and North Carolina are paying for phoned-in patient visits, according to America’s Health Insurance Plans, a lobbying group.

“A lot of carriers wouldn’t reimburse telephonic encounters” in the past, Corlette said.

Catherine Parisian, a professor in North Carolina, said what seemed like a routine follow-up call with her specialist last month became a telehealth consultation with an $80 copay.

“What would have been treated as a phone call, they now bill as telemedicine,” she said. “The physician would not call me without billing me.” She protested the charge and said she has not been billed yet.

By many accounts, the number of doctor encounters via video has soared since the Department of Health and Human Services said in mid-March that it would take “unprecedented steps to expand Americans’ access to telehealth services.”

Medicare expanded benefits to pay for most telemedicine nationwide instead of just for patients in rural areas and other limited circumstances, HHS said. The program has also temporarily dropped a ban on doctors waiving copays and other patient cost sharing. Such waivers might have been considered violations of federal anti-kickback laws.

At the same time, the CARES Act, passed by Congress last month to address the COVID-19 emergency, allows private, high-deductible health insurance to make an exception for telehealth in patient cost sharing. Such plans can now pay for video doctor visits even if patients haven’t met the deductible.

Dozens of private health insurers listed by AHIP say they have eliminated copays and other cost sharing for telemedicine. Cigna, however, has waived out-of-pocket costs only for telehealth associated with COVID-19 screening. Cigna did not respond to requests for comment.

Teladoc Health, a large, publicly traded telemedicine company, said its volume has doubled to 20,000 medical visits a day since early March. Its stock price has nearly doubled, too, since Jan. 1.

With such a sharp increase, it’s not surprising that insurers and physicians are struggling to keep up, said Circle Medical CEO Favvas.

“It’s going to be an imperfect process for a while,” he said. “It’s understandable given that things are moving so quickly.”

Abbie VanSickle, a California journalist, wanted her baby’s scheduled wellness visit done remotely because she worried about visiting a medical office during a pandemic. Her insurer, UnitedHealthcare, would not pay for it, the pediatrician told her. Mom and baby had to come in.

“It seems like such an unnecessary risk to take,” VanSickle said. “If we can’t do wellness visits, we’re surely not alone.”

A UnitedHealthcare spokesperson said that there was a misunderstanding and that the baby’s remote visit would be covered without a copay.

Jacklyn Grace Lacey, a New York City medical anthropologist, had a similar problem. She had to renew a prescription a few weeks after Cuomo ordered insurers to waive patient cost sharing for telehealth appointments.

Oxford Telemedicine Copay

The doctor’s office told her she needed to come in for a visit or book a telemedicine appointment. The video visit came with an “administrative fee” of $50 that she would have had to pay upfront, she said — five times what the copay would have been for an in-person session.

Aetna Telemedicine Copay

“I was not going to go into a doctor’s office and potentially expose people just to get a refill on my monthly medication,” she said.