Employee benefit plans preserved with telehealth, primary care strengthened in budget bill

Council encourages bipartisan focus on future benefits policy

WASHINGTON, DC – “With the dust now settled on the ‘One Big, Beautiful Bill Act’ (H.R. 1) and the legislation on its way to the president’s desk, employer plan sponsors are relieved that lawmakers wisely avoided disastrous changes to the tax incentives for employer-provided health and retirement plans,” American Benefits Council President Katy Johnson said today. “Employer plan sponsors also commend the inclusion in the final measure of policy provisions to expand access to telehealth and promote primary care.”

With limits to the longstanding individual income tax exclusion and the employer tax deduction for employer-provided health coverage potentially in lawmakers’ sights at the outset of the tax reform debate, the Council consistently underscored the vital importance of preserving these incentives. This included commissioning and sharing public opinion polling showing strong voter opposition to the concept of taxing employer-provided health coverage, as well as empirical research (conducted by EY, cosponsored by the Council of Insurance Agents and Brokers) showing the negative economic and health consequences of limiting the individual tax exclusion. Our allies at the Alliance to Fight for Health Care contributed additional public opinion research while Mercer provided some very helpful analysis on the negative impact of limiting the favorable tax treatment for employer-provided health coverage.

While the threat to the tax deferral for individual contributions to workplace retirement plans was less public, the Council likewise stayed in very close contact with congressional staff as the bill advanced through the legislative process to ensure that these important incentives remained not at risk, to support efforts to keep these issues as bipartisan as possible and to provide technical expertise on provisions with potential impact on plan sponsors.

“We thank supporters of employee benefit plans on Capitol Hill for working with us to protect these vital tax incentives, which provide an incredible bargain for American taxpayers,” Johnson said.

As for what was actually included in the bill:

Telehealth

For years, the Council has advocated for the permanent extension of the provision giving employers the permanent flexibility to offer telehealth services pre-deductible to employees with a health savings account (HSA) eligible high-deductible health plan. In the weeks leading up to the final votes, the Council sent a letter to Senate and House leadership calling on Congress to restore access to affordable telehealth services, particularly mental health services and for those in rural and underserved areas. The Council was also pleased to be one of more than 300 organizations signing on to a letter earlier this year urging Congress to keep telehealth affordable for working families.

The Council was strongly supportive of the Telehealth Expansion Act introduced earlier this year and greatly appreciates the leadership of its bipartisan cosponsors: Senators Steve Daines (R-MT) and Catherine Cortez Masto (D-NV) and Representatives Jodey Arrington (R-TX), Susie Lee (D-NV), Adrian Smith (R-NE), Brad Schneider (D-IL), Brian Fitzpatrick (R-PA), and Jimmy Panetta (D-CA).

“Allowing this lifeline to affordable care to expire at the end of 2024 raised the cost of virtual care for much-needed mental health and other services,” Johnson said. “We are grateful for the retroactive and permanent extension provided in H.R. 1.”

Direct Primary Care

In addition to the telehealth extension, H.R. 1 also includes another HSA-related provision endorsed by the Council and reflective of the Council’s goal of promoting primary care specifically. Under the legislation, direct primary care arrangements with monthly premiums of $150 or less are no longer disqualifying coverage for purposes of high-deductible health plans coupled with HSAs.

“Direct primary care represents just one of the many innovations employers are pursuing to lower costs and improve the quality of care for employees and their families,” Johnson said. “We hope this provision is just the first step in recognizing the potential of care delivery reforms.”

What’s Next

“Unfortunately, the budget reconciliation bill did not advance other important bipartisan employee benefits policies, such as site-neutral payment reform and other money-saving policies contained in the Lower Cost, More Transparency Act and our own legislative proposal to allow employers to use otherwise inaccessible surplus assets in pension plans and retiree health accounts to provide other benefits,” Johnson said. “We look forward to continuing to focus on these policies, on a bipartisan basis, in the months ahead.”

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