The future of standalone telemedicine in doubt

The following frequently asked questions (FAQs) address the potential compliance risk for employers offering telemedicine coverage to employees on a standalone basis. The FAQs are intended to enable employers to make an informed business decision about whether to continue offering telemedicine on a standalone basis if further compliance relief does not occur.

1. Why is offering telemedicine coverage to employees as a standalone benefit a compliance issue?
   
   Employer-sponsored telemedicine coverage is a group health plan and is generally subject to the same compliance requirements as major medical coverage. As a standalone benefit, the most significant requirement is compliance with the Affordable Care Act’s (ACA) plan design mandates (e.g., required coverage for preventive services), which telemedicine cannot satisfy by itself.
   
   The Compliance COE’s position has been that a general telemedicine benefit does not qualify for an exception from these requirements and – without federal relief – employers should limit telemedicine coverage to employees enrolled in the employer’s major medical coverage. This integration allows the telemedicine benefit to rely on the major medical coverage to satisfy the ACA’s plan design mandates. We agree that the federal agencies have historically paid little attention to this. That said, limited federal relief did appear during the COVID-19 pandemic (see #3 below).
   
   Please note that this issue only applies to employer-sponsored telemedicine coverage. There is an argument that an employer does not sponsor a telemedicine benefit when all of the following are true: (i) the employer does not pay anything toward the implementation or maintenance of the benefit; (ii) the employer does not communicate or otherwise indicate the benefit is an employer-sponsored benefit; and (iii) employees cannot pay for the telemedicine benefit on a pre-tax basis.
   
   
2. Does this affect the MMA Consumer Card?
   
   It can. If the card includes Teladoc, the telemedicine coverage is an employer-sponsored group health plan if the employer pays anything toward its implementation, pays a monthly fee (e.g., a PEPM fee), or otherwise communicates the card is an employer-sponsored benefit. It makes no difference that the monthly fee includes other unrelated services or that the employer pays the fee to a third party other than Teladoc.
   
   
3. Didn’t the federal government address this during the COVID-19 pandemic?
   
   The U.S. Department of Labor (DOL) and other federal agencies granted limited relief in 2020, temporarily excusing standalone telemedicine from having to comply with the ACA’s plan design mandates. This relief confirmed that employer-sponsored telemedicine is subject to group health plan requirements including the ACA. 
   
   As written, the relief only applied to telemedicine offered to employees who were not eligible for the employer’s major medical coverage. The industry generally offered telemedicine to everyone without regard to medical plan eligibility. This did not appear to be a significant concern once it became clear the federal agencies were not inclined to do anything about it.
   
   The relief ended for telemedicine plan years beginning on or after May 12, 2023 (the federal COVID-19 public health emergency ended on May 11^th). The Compliance COE was generally comfortable with employers waiting to see whether further relief appeared in 2023 before making any changes to its benefit or terms of eligibility. Among other reasons, the DOL informally indicated it would not pursue enforcement in 2023.
   
   
4. Will the federal government provide further relief?
   
   A bill was introduced in Congress (HR 824) that would allow employers to offer standalone telemedicine without conditions on a permanent basis, but our sources indicate that HR 824 is likely to fail and will not become law. We may not know this for certain before the Consolidated Appropriations Act, 2024 appears. Unfortunately, this may not occur before mid-December or later.
   
   
5. What is the likelihood of enforcement if there is no further relief?
   
   If no relief occurs, we expect the DOL will begin some sort of enforcement effort in 2024 (and believe it has hinted at this). Given the DOL’s resource constraints, we do not believe this will be a specific effort focused on telemedicine. It seems more likely that the DOL will merely pay greater attention to telemedicine during its general health and welfare compliance audits.
   
   For most employers, the risk of a general audit in a given year is low. The potential civil penalties are alarming, but it seems reasonable to believe the DOL may direct first-time offenders to comply rather than assessing penalties (at least early on). This would still require employers to quickly make changes to their telemedicine programs. In the meantime, employers offering standalone telemedicine need to determine their level of risk tolerance unless and until a pattern of enforcement develops. We recommend employers consult their legal counsel before choosing to continue offering standalone telemedicine coverage.
   
   
6. What about telemedicine and eligibility for health savings accounts?
   
   The ability to offer telemedicine as a standalone benefit and whether telemedicine affects HSA eligibility are separate and unrelated issues. Existing relief prevents a general telemedicine benefit from affecting HSA eligibility through HDHP plan years that begin in 2024. For examples:
   
   · For a calendar year HDHP, the relief ends after December 31, 2024; and
   · For an HDHP operating on a July 1^st – June 30^th plan year, the relief ends after June 30, 2025.
   
   The prospects of further relief on this particular issue appear decent.