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Federal FAQ: Insurance Carriers and Plans Must Pay for COVID Tests

On January 10, 2022, the DOL, HHS and the Treasury (the “Departments”) issued guidance in the form of FAQs regarding new COVID-19 test requirements. The guidance states that, starting January 15, 2022, and effective until the end of the public health emergency, health insurance carriers and group health plans (including self-insured plans) must pay for over-the-counter (OTC) COVID-19 tests without cost-sharing, prior authorization or other medical management requirements. The Departments produced this guidance under orders from the Biden administration and it adds to the existing requirement, under the FFCRA and the CARES Act, that carriers and plans must pay for COVID-19 tests that a healthcare provider provides to participants, beneficiaries or enrollees (I.e., employees and their dependents covered by the employer’s group health plan).

COVID-19 Test Coverage Requirement

Six FAQs address the new COVID-19 test coverage requirement. At a high level, the FAQs state:

  • Coverage may (but is not required to) apply to tests purchased prior to January 15, 2022.
  • The plan can provide the coverage by reimbursing sellers of OTC COVID-19 tests directly (referred to as direct coverage) or by requiring covered employees and their dependents who purchase an OTC COVID-19 test to submit a claim for reimbursement to the plan. The Departments strongly encourage, but do not require, direct coverage.
  • The requirement only applies to “diagnostic” OTC COVID-19 tests, such as PCR and antigen tests, in contrast to those not primarily intended for individualized diagnosis or treatment of COVID-19. That includes any FDA-approved at-home test, whether ordered in person or online.
  • Plans and carriers may limit the number of tests reimbursed to no less than eight OTC COVID-19 tests per covered individual per 30-day period (or per calendar month) if purchased without the involvement of a healthcare provider. There is no limit on the number of tests, including OTC COVID-19 tests, which plans and carriers must cover if a healthcare provider orders or administers them following an individualized clinical assessment.
  • Plans and carriers must accept all reimbursement claims submitted with valid receipts and must not unduly delay reimbursement.
  • The Departments encourage plans and carriers to develop a network of convenient locations (e.g., pharmacies, stores, online retailers, etc.) for covered employees and their dependents – at the direct point of sale – to obtain tests with no upfront cost. If the plan or carrier has set up a network of preferred retailers, covered employees and their dependents who purchase a test outside that network are still entitled to reimbursement from the plan or carrier of up to $12 per individual test, if they submit a valid receipt.
  • Note that this requirement applies only to OTC COVID-19 tests purchased or obtained by employees covered by the employer’s group health plan and their dependents.

Employer Takeaway

Employers should review this guidance and work closely with their carrier or TPA to develop a strategy and process for ensuring compliance with the COVID-19 test coverage requirements and in communicating with employees. Further, employers should discuss with their carrier or TPA whether to set up direct coverage through a preferred pharmacy or retailer, or require covered employees and their dependents to pay the cost upfront and reimburse it later.

Each FAQ provides additional detail, as set forth below.

FAQ#1 asserts that the FFCRA provides the authority for this requirement. The FFCRA requires plans and carriers to cover the cost of COVID-19 tests without imposing any cost-sharing requirements, prior authorization or other medical management requirements. The FFCRA does not require plans and carriers to pay the sellers of these tests directly, requiring covered employees and their dependents to pay for the tests and then submit a request for reimbursement is also acceptable. In any event, the requirement is no longer limited to tests provided because of an order from a healthcare provider — covered employees and their dependents can obtain a test on their own for any reason. This new guidance does not amend previous guidance stating that plans and carriers are not required to pay for tests that employees must take for employment purposes. Note that absent further guidance we believe that this includes the federal OSHA emergency temporary standard (ETS) on vaccine mandates (unless and until that ETSis struck down by the courts).

FAQ#2 creates a safe harbor for plans and carriers to satisfy this requirement. Under this safe harbor, a plan or carrier can provide coverage of OTC COVID-19 tests purchased by covered employees and their dependents by arranging for direct coverage of OTC COVID-19 tests through both its pharmacy network and a direct-to-consumer shipping program. The safe harbor allows plans and carriers that use it to limit reimbursement for OTC COVID-19 tests from non-preferred pharmacies or other retailers to no less than the actual price or $12 per test (whichever is lower). In order to use this safe harbor, the plan or issuer must take reasonable steps to ensure that covered employees and their dependents have adequate access to OTC COVID-19 tests, through an adequate number of retail locations (including both in-person and online locations). A plan or issuer that is unable to meet the requirements of this safe harbor cannot deny coverage or impose cost-sharing (including setting limits on the amount of reimbursement for OTC COVID-19 tests) with respect to any OTC COVID-19 tests obtained by covered employees and their dependents, including those purchased from non-preferred sellers. Note that this safe harbor applies only to the requirement to provide coverage of OTC COVID-19 tests. Plans and carriers must continue to provide coverage for COVID-19 tests that a healthcare provider administers either directly or through a prescription, even when relying on this safe harbor.

FAQ#3 creates another safe harbor under which plans and carriers may set limits on the amount of tests that a person can obtain because of this requirement. The Departments will not take action against a plan or issuer that limits the number of tests covered for each covered employees or their dependents to no less than eight tests per 30-day period (or per calendar month). It is important to note that the eight test per month limit applies to each covered employee and dependent (so, as an example, an employee covering a spouse and two children could get 32 tests per month). In addition, the limit applies to each individual test, regardless of how the tests are packaged (e.g., two tests are often packaged in one box). While plans and carriers can apply an 8-test monthly limit, they must not limit covered employees and their dependents to a smaller number of these tests over a shorter period (for example, limiting individuals to four tests per 15-day period). However, they may set limits that are more generous. This safe harbor does not apply either to tests that a healthcare provider administers directly or through a prescription.

FAQ#4 allows plans and carriers to take reasonable steps to prevent, detect and address fraud and abuse when satisfying this requirement. Acceptable steps to take include an attestation requirement, such as a signature on a brief attestation document, that the OTC COVID-19 test was purchased by the participant or their dependents for personal use, not for employment purposes; has not been (and will not be) reimbursed by another source; and is not for resale. In addition, plans and carriers can require covered employees and their dependents to provide reasonable documentation of proof of purchase with a claim for reimbursement for the cost of an OTC COVID-19 test. The guidance cautions that fraud and abuse programs are not reasonable if they require an individual to submit multiple documents or involve numerous steps that unduly delay access to or reimbursement for OTC COVID-19 tests by covered employees or their dependents.

FAQ#5 allows plans and carriers to provide education and information resources to support consumers seeking OTC COVID-19 testing, as long as such resources make clear that the plan or carrier provides coverage for, including reimbursement of, all OTC COVID-19 tests. Such information includes guidance to help people access and effectively use OTC COVID-19 tests, as well as information to explain the differences between OTC COVID-19 tests and tests performed or ordered by a healthcare provider and/or processed in a laboratory. Plans and carriers can also provide information concerning the quality and reliability of various tests, including shelf life and expiration dates. Plans and carriers can also provide information to participants and their dependents about obtaining tests and obtaining reimbursement for tests they pay for out-of-pocket.

FAQ#6 establishes the effective date of the requirement as January 15, 2022. Plans and carriers may amend the terms of a plan or coverage as necessary to comply with these updates related to coverage of OTC COVID-19 tests without regard to otherwise applicable restrictions on mid-year changes to health insurance coverage.

Note that this guidance includes three additional FAQs that cover other ACA requirements. We will provide a discussion of these FAQs in the January 19, 2022, edition of Compliance Corner.

DOL FAQs About Affordable Care Act Implementation Part 51, Families First Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security Act Implementation.

HHS Press Release.

CMS FAQ How to Get Your At-Home Over-The-Counter COVID-19 Test for Free

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