The Impact of the H.R. 1 Law on the Telehealth Safe Harbor

When President Donald Trump signed into law H.R. 1, otherwise known as the One Big Beautiful Bill Act, on July 4, the bill reinstated and permanently extended the high-deductible health plan (HDHP) telehealth safe harbor for plan years beginning after Dec. 31, 2024.

Typically, people enrolled in HDHPs with a health savings account (HSA) must meet their deductible before their insurance starts covering the cost of medical care. This can discourage individuals from seeking timely care, and lead to worsening health and greater costs.

Now, employers can offer low- or no-cost telehealth and remote care services before the deductible is met under a HDHP without affecting HSA eligibility.

“For the last few years, total rewards professionals have been navigating temporary legislation that allowed HSA-qualified plans to cover telehealth services before the deductible,” said Sara K. Taylor, the senior director of employee spending accounts at consulting firm WTW. “This bill represents a permanent policy change and provides total rewards professionals with more certainty and consistency.”

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Background

According to a post written by experts at WTW, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March 2020 during the COVID-19 pandemic, established a temporary telehealth HDHP safe harbor that allowed such plans to provide telehealth or other remote healthcare services with no (or a lower) deductible. Under this safe harbor, these services were not considered disqualifying coverage for purposes of HSA eligibility. This provision was initially temporary, and the act was extended twice before it expired on Dec. 31, 2024.

Without an extension, the WTW experts said telehealth services beyond preventive care that were provided to employees for free or for less than fair market value or before the minimum annual deductible were met were considered “disqualifying health coverage,” thus making the employee ineligible to contribute to an HSA.

With the passing of H.R. 1, more than 32 million individuals are now able to permanently receive pre-deductible coverage of telehealth services, according to the Alliance for Connected Care, an advocacy group focused on providing digital healthcare initiatives such as virtual care and telehealth.

WorldatWork’s 2024 Total Rewards Inventory of Programs and Practices study also found 96% of organizations offered telemedicine services to their employees, signaling a heightened need for workers.

Next Steps for Employers

According to Taylor, it is unlikely that current health coverage plans will change. However, for upcoming plan years — generally starting on Jan. 1, 2026 — they could change if the plan doesn’t already permit telehealth coverage before the deductible. This could allow more individuals to contribute to an HSA, she said.

In a separate post, WTW experts noted employers will want to consider the following:

• The safe harbor allows — but does not require — employers to cover telehealth benefits before the HDHP minimum annual deductible is satisfied, without affecting HSA eligibility.
• The retroactive effective date means employees who were receiving telehealth benefits under the safe harbor can continue doing so without experiencing a gap as had occurred under prior extensions.
• Any changes to telehealth benefits must be communicated to plan participants in a timely manner.

According to a post by employment law firm McDermott Will & Schulte, digital health and telehealth providers, virtual and remote care providers, employer plan sponsors, insurers, and third-party administrators may reassess and update their services and coverage for HDHP participants.

“For example, employer plan sponsors may elect to reinstate free or low-cost coverage for telehealth services retroactively to Jan. 1, 2025, or choose to do so prospectively for the next plan year, if at all,” the legal experts wrote. “Telehealth providers, insurers and third-party administrators may wish to work with their employer and health plan partners to update their services and plan administration to reflect the potential increase in demand for telehealth and remote care services from HDHP participants, who can now access these services with no cost-sharing prior to satisfying the applicable deductible.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Total Rewards
• Well-Being