Breaking News: Congress Discovers that Telehealth is a Good Thing
For years, the IRS’s HSA rules treated telemedicine like a threat: if your HDHP covered virtual visits before the deductible, your HSA eligibility disappeared. The idea was that people needed “skin in the game,” and early benefits would ruin that model.
COVID shattered that logic, when conditions essentially forced Congress to temporarily allow HDHPs to cover telehealth without penalizing HSA status – but the kicker is that it was done on a year-to-year basis, with an explicitly sunset date, rather than simply put into law in the traditional sense. Now, however, the One Big Beautiful Bill Act has locked in the telemedicine safe harbor permanently for plan years starting in 2025.
This matters because it shows Congress admitting a pretty radical idea: sometimes, covering care before the deductible actually supports the HSA concept, and does not undermine it. Virtual care is comparatively inexpensive and often avoids more expensive claims, reducing the overall drain on the already-overburdened (how’s that for an understatement?) healthcare and insurance industries, including self-funded employers.
This change plays a part in modernizing how we conceptualize access in consumer-driven plans. By making this exemption permanent, Congress implicitly acknowledged that the old “skin in the game” model no longer fits the way care is delivered today in many cases. The telehealth safe harbor reflects a shift in thinking: that HSA-compatible plans can promote value and access without sacrificing financial discipline. Virtual care was never designed to be some backdoor loophole; it’s an efficient and scalable way to reach patients early, triage far less wastefully, and often avoid more expensive downstream care.
Put another way, the rules have finally caught up to the clinical and technological realities.
For self-funded health plans, this is a win across the board. First, it removes a longstanding compliance headache; plans can now offer low-cost virtual care pre-deductible without compromising HSA eligibility, which is not only cost-effective but can be a recruitment or retention incentive. It also aligns with what employees actually want, which is convenient, accessible care that doesn’t require scheduling three weeks out and sitting in a cold waiting room for 20 minutes.
And for patients, especially those managing episodic issues, living in rural areas, or who can’t devote an entire morning to visiting a doctor, it means faster care, fewer access barriers, and more control over how and when they engage with the system.
For once, everyone’s interests are aligned. All it took was a pandemic.