January 15th effective date requires urgent attention from plan sponsors and service providers

Yesterday, the Depts. of Health & Human Services, Labor and Treasury (the “agencies”) issued guidance – in the form of Frequently Asked Questions (FAQs) – providing that group health plans must cover, without cost-sharing, over-the-counter (OTC) COVID tests.

This new information is based on provisions in the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act requiring group health plans to cover diagnostic COVID tests without cost-sharing. Until now, that language had generally been understood to require coverage of tests administered by a medical provider.

Main elements of the FAQ guidance are summarized below…

Basic Requirement: Group health plans (and health insurers) are required to cover diagnostic OTC COVID tests without imposing cost-sharing, prior authorization, etc. This means plans must provide coverage without out-of-pocket expenses to the participant. The plan can provide the coverage by reimbursing sellers of OTC COVID tests directly or by requiring participants who purchase an OTC COVID test to submit a claim for reimbursement.

Timeline: The requirement is effective on January 15, 2022 and continues for the duration of the public health emergency.

Scope: Only applies to “diagnostic” OTC COVID tests; testing that is for employment purposes is not considered diagnostic and does not fall under this new requirement.  

Quantity: Plans may limit the number of tests reimbursed to no less than eight (8) OTC COVID tests per covered individual per 30-day period (or calendar month).

Dollar Limit: Plans that provide direct coverage of OTC COVID tests may not limit coverage to only tests provided through preferred pharmacies or other retailers that are part of the direct coverage program. However, under a safe harbor, the agencies state that plans may limit reimbursement of tests purchased outside the direct coverage program to $12 (or the cost of the test, if lower).* The agencies also note that plans must take reasonable steps to ensure participants have adequate access to tests under the direct coverage option.  

Fraud and Abuse: The agencies provide several examples of permissible activities, including that plans can require attestation that the test was purchased for the covered individual, is not for employment purposes, has not/will not be reimbursed by another source and is not for resale. Plans may also require reasonable documentation of proof of purchase.

*The safe harbor applies if the plan provides tests through its pharmacy network and/or a direct-to-consumer shipping program, under which there is no upfront out-of-pocket expenditure by the participant.