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Telemedicine: An Employer’s Complement to Traditional Health Care Delivery

Renee Sazci · June 2, 2020 · 8 min read

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Projected Telemedicine Growth and Trends to Watch

Before COVID-19’s 2020 outbreak, the United States Telemedicine Market was already experiencing significant momentum and was projected to experience 18.5% compounded annual growth (CAGR) between 2019 and 2025. This increase would bring the market value from $14.3 billion in 2014 to $45 billion in 2019, and $64 billion by 2025.

Now, healthcare providers are utilizing telemedicine to provide many needed medical services despite the pandemic. While it’s unfortunate that COVID-19 was the catalyst, it’s clear that it’s permanently altered the telemedicine landscape. Revised projections for the United States Telemedicine Market in 2026 are now $176 billion, up from 2025’s $64 billion forecast.

These projections are on par with patient sentiment. According to a March 2020 survey conducted by “Sage Growth Partner and Black Book Market Research, 25% of consumers had used telehealth before the COVID-19 pandemic. Fifty-nine percent reported that they are more likely to use telehealth services now than previously, and 33% would even leave their current physician for a provider who offered telehealth access.”

Telemedicine growth drivers include the rising cases of COVID-19 infections across the United States and favorable government initiatives, an increasing prevalence in chronic diseases, long treatment wait times, a growing number of smartphone users—plus advances in mobile phone and internet technologies, and a greater need for cost-saving healthcare delivery.

6 Telemedicine Trends to Watch:

  • Permanent reimbursement for telemedicine in almost every state, even after COVID-19 resolves.

  • A behavioral shift that accelerates telemedicine adoption.

  • Hospitals across the U.S. investing more in telemedicine solutions and practitioner education.

  • A rise in mobile health use as smartphones and internet connectivity increases.

  • A greater number of telemedicine startups indicative of the telemedicine’s uptick in use during and post COVID-19.

  • Provider-focused telemedicine innovation that improves efficiency, capacity, and workflow.

Top 3 Reasons to Provide Telemedicine Benefits

telemedicine employee benefit

It’s been found that employees that use telemedicine are happier and healthier, making them more productive and engaged team members. Plus, telemedicine can boost an employer’s revenue and help maintain a stable workforce while reducing healthcare costs. That’s an employer-employee win-win.

The telemedicine benefit often comes at no-cost or low-cost to employers. Many health plans or ancillary benefits offer a telemedicine component at no-cost. In the case that a third-party provider is needed, the savings often outweigh the cost. Telemedicine providers either charge a low per employee per month fee or offer the service on a pay-as-you-go model, which charges employers only when an employee uses the plan.

1. Cost Efficiencies and Savings

Containing the rising cost of healthcare is one of the strongest incentives for employers to offer telemedicine. Telemedicine provides employers short-term savings from the reduced cost of healthcare claims resulting from unnecessary trips to the doctor and a reduction in emergency room visits. Employees that seek out medical advice via telemedicine also save on the cost of care.

According to the American Medical Association, the use of telemedicine translates to individual employees saving $300 per year, and a family of four saving $1,000 per year. This is because when telemedicine is used, patients seek out treatment more frequently—and conveniently—and are able to stave off higher-cost medical care. A telemedicine appointment, instead of an emergency room visit, can save between $300 to $1,500 per averted occurrence.

Furthermore, employers experience added savings from increased productivity when offering telemedicine support for preventative care, chronic condition treatment, and mental health services. An average 20-minute doctor’s appointment takes approximately two hours due to wait time, paperwork, and communicating with non-medical staff, plus travel time to and from the office. Telemedicine eliminates the time that employees spend traveling and waiting, so they can focus on their work. Telemedicine gives hours back to their lives and minimizes weekday work interruptions.

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2. Competitive Benefits

According to the Lively 2019 Wellness and Wealth Report, “37% of employees chose healthcare as the most important benefit when thinking of switching jobs or staying at a job. And the majority of Americans (76 percent) rank healthcare in their top three priorities when considering workplace benefits.” Across all company sizes, telemedicine demand is up, and employers are offering the benefit as part of a competitive benefits package.

With increasingly busy schedules, employees are turning to telemedicine to receive the care they need when they need it. And employers are paying attention. In 2019, 69% of businesses with 50 or more workers offered telehealth. And according to the First Stop Health Annual Health Benefits Cost Containment Report, 91% of employers planned to provide telemedicine in 2020. Telemedicine is becoming increasingly important to stay competitive, as prospective employers evaluate new career opportunities.

3. Improved Access & Quality of Care

Some employees have noted that they feel pressure or guilt for seeking in-person medical care during business hours. These perceptions and feelings force employees to choose between their physical or mental wellness—and work. This often leads to skipping necessary preventative care appointments and delaying care. In fact, “nine out of ten Americans say they would cancel or reschedule a preventative care appointment due to workplace pressures.” Millennials are especially sensitive to workplace demands, with three out of four millennials avoiding preventative care during work hours. Telemedicine provides employees and their families more convenient access to healthcare services without choosing between getting medical advice or care—or going to work.

An employer that offers a telemedicine program can expect their employees to be healthier because they aren’t skipping the preventative care appointments that they need, plus they’ll take fewer sick days because of in-person doctor appointments. Telemedicine can also provide a higher quality of care for patients. “A study by the University of Rochester Medical Center found that the quality of telemedicine care was as effective as in-person care.” And for patients with both medical and mental health conditions, telemedicine results in “38% fewer hospital admissions, 31% fewer hospital readmissions, they were 63% more likely to spend fewer days in the hospital, and were more engaged with their health care.” Employees also appreciate the convenience, flexibility, and real-time care when they need it.

How to Pay for Telemedicine with a CDHP

telemedicine pay hsa

Some health plans include a telemedicine component, and others do not. For those plans designed with a telemedicine plan component, the telemedicine cost is not subsidized, so it fits into the Consumer-Driven Health Plan (CDHP) design. For those plans that don’t have a telemedicine component, employers seek out a third-party provider to offer the service. Traditionally, offering these services would not work with an Health Savings Account-eligible plan, and the telemedicine coverage would make the health plan lose its HSA eligibility. But because of COVID-19, this has changed.

As of January 1, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES Act made telemedicine temporarily HSA-eligible. This means that any appointments or services covered under an HSA-eligible plan that began January 1, 2020, through December 31, 2021, are covered before the deductible and will not lose their HSA eligibility status. Also, should telemedicine services require payment, those services can be paid for using HSA funds.

What is an HSA?

HSAs have the following attributes that make them flexible to use for short-term medical needs or retirement healthcare savings.

  • Contributions are 100% tax-deductible (until you reach the federal limit), and HSAs have triple tax advantages (tax-deductible contributions, tax-free interest, and tax-free withdrawals for medical expenses).

  • HSAs are owned by individuals (not employers) and can be transferred from job-to-job or institution-to-institution, similar to a 401(k) or IRA.

  • After age 65, HSA account holders can use their money for non-health related expenses and only pay income taxes on withdrawals. No penalty!

What is a Consumer-Driven Health Plan

telemedicine hsa

A Consumer-Driven Health Plan (CDHP) is the marriage of a qualifying High-Deductible Health Plan (HDHP) with a pre-tax payment account, like a Health Savings Account (HSA).

Offering employees a qualifying HDHP with lower premiums and higher deductibles generally means an average of $776 less per individual plan or $1,596 per family plan, per year, compared to PPO or HMO insurance premiums. If an employer has 100 employees, that’s a premium savings of $77,600 per year. In 2019, an individual employer-sponsored HDHP plan compared to an HMO plan provided an annual premium savings of $826, while an employer-sponsored HDHP plan versus a PPO plan provided a premium savings of $1,263.

A CDHP has numerous benefits to employees. Employees will immediately benefit from the reduction in their premium cost with an HSA-eligible HDHP. They can use those extra funds to contribute to a triple tax-advantaged HSA. Funds deposited into the HSA are pre-tax, grow tax-free, and are tax-free when withdrawn for qualified medical expenses. HSAs complement the HDHP, which enables participants to pay for the deductible, qualified medical expenses, and future health expenses. Plus, these funds never expire.

Download the white paper Telemedicine: A Critical Component of the Broker’s Benefits Offering to learn why it’s vital that brokers offer telemedicine as a complement to traditional care delivery.

Renee Sazci

Renee Sazci

Renée knows that the healthcare industry is complicated. With so many options, choosing the right path can be unnecessarily complex. At Lively, she employs storytelling to make it easier for you to make informed healthcare and financial decisions. When she's not writing, she's flexing her green thumb.

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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.



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