Update: Telemedicine benefits need attention for COBRA compliance & beyond

Like more and more companies, you probably offer a stand-alone telemedicine program to your employees. You already know you must list your medical, dental, vision, Health Flexible Spending Account plan, your Health Reimbursement Account plan and your Employee Assistance Plan on a COBRA notice but what about your telemedicine plan?  Do you list it on a COBRA notice when someone terminates employment? This article dives deeper into why the answer is YES, you must list it on the COBRA notice because it is, in fact, a group health plan. Update: And, there’s more you need to do beyond COBRA to ensure your company is in compliance. Read on.

What programs are considered a “group medical plan?”

ERISA’s definition of a group health plan essentially has three elements that it must be:

  1. Either a plan, fund or program. To determine whether there is a plan, fund or program, courts look to whether a reasonable person could ascertain:
    1. Can the intended benefits be identified?
    1. Is a class of beneficiaries identified?
    1. Is the source of financing identifiable?
    1. Is the procedure for receiving benefits explained?
  2. Established or maintained by an employer. A plan “maintained by an employer or employee organization is any plan of, or contributed to (directly or indirectly) by, an employer or employee organization.”  Even if the employer does not contribute to the plan, if coverage under the plan is not be available at the same cost to an individual but for the individual’s employment-related connection to the employer then the employer is deemed to maintain the plan.
  3. For the purpose of providing medical care. Medical care and health care are synonymous for COBRA purposes because the IRS final regulations clarify that health care has the same meaning as medical care under IRS Code 213(d).

Does a telemedicine program meet the standards of a group health plan?

Let’s take a closer look at a popular stand-alone telemedicine provider called Teladoc.  According to their website, “We provide access to on-demand 24/7 phone, video and mobile access to US Board Certified doctors who can diagnose your problem and prescribe medication when needed” (https://www.teladoc.com). This definition qualifies this program as a COBRA-eligible benefit. Update: I reached out to a representative at Teladoc who did not respond to my question of whether it is or is not a COBRA eligible benefit but did answer other questions about ERISA in this response:

“Teladoc, as a business itself, is not subject to ERISA. However, the employer is considered to be sponsoring a group health plan by entering into a contract with Teladoc, therefore the employer is subject to ERISA. This would apply whether the employer establishes its arrangements with Teladoc as a stand-alone plan, as part of the employer’s self-funded plan or as part of the employer’s insured plan.”

I called the Department of Labor. They agreed that Teladoc is indeed a “medical plan” subject to COBRA. They agreed it must meet the ERISA requirements of having a Summary Plan Description (SPD) and be included on a Form 5500 (if applicable with 100+ on the Teledoc plan at the start of a “plan year”).

Important Update: That’s it folks, if you have a stand-alone Teladoc plan, you’re the ERISA sponsor of this plan and you’d better find a way to come up with the required Plan Documents and Summary Plan Description to distribute to participants because this vendor says it’s your responsibility, not theirs.

Ah, but you may be asking questions about meeting ACA standards like:

  • What about meeting the standards of being an “Excepted Benefit” under the Affordable Care Act (ACA)? Since it’s not excepted coverage under HIPAA Portability, it’s not an excepted benefit under the ACA. This benefit does not provide first dollar preventive care services, an ACA requirement. It has limits in services which would not meet the Minimum Essential Coverage requirements (MEC), another requirement of the ACA. 
  • So, how can an employer offer this benefit as a “medical plan” when it falls short of all the ACA requirements? Remember when Health Reimbursement Arrangements (HRA) with plan limits/caps were found acceptable when they were “integrated” with a major medical plan? The features of the major medical plan were the ACA focus and therefore the ancillary medical plan, the HRA, was attached to an ACA-acceptable plan and found to comply. It’s the same with the telemedicine plan. If it is included/integrated in the major medical plan, or. wait for it.is attached to an “integrated” HRA it becomes a legitimate ACA approved benefit. Hurry, don’t wait and call your favorite third-party administrator to ask about an HRA!

In fact, a stand-alone telemedicine plan is not a legal group medical plan under ACA rules because it has limits to coverage, doesn’t provide preventive care, etc. Therefore, it must be somehow “integrated” with the major medical plan through an HRA which is “integrated” with the medical plan. 

Last, in utilizing a telemedicine benefit when enrolled in a HDHP Health Savings Account medical plan, the telemedicine benefit provider will need to bill participants “full price” (i.e. not free or not an office visit co-pay amount, but the approximate equivalent of an actual office visit amount if the HSA participant were to visit a medical provider under normal circumstances) for using their services or it will be deemed impermissible coverage, thereby disqualifying the participant from HSA eligibility.

We’re way beyond COBRA now

So folks, if you have a stand-alone telemedicine plan in place, match it with an HRA, put it on a COBRA notice, create your own Summary Plan Description so you can include it in your ERISA wrap document and be sure to include it in your Form 5500 filing. This is a great employee benefit, let’s make sure we treat it like a “medical plan” and keep compliant!

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