Group Health Plans Coverage of At-Home COVID-19 Tests – UPDATE

Employee Benefits & Executive Compensation
 

On January 14, 2022, Calfee published a First Alert discussing the FAQs issued by the Departments of Health and Human Services, Labor and Treasury (collectively the "Departments") on January 10, 2022. These FAQs addressed the requirement that group health plans provide coverage for over-the-counter COVID-19 diagnostic tests ("OTC COVID-19 tests") at no cost to participants for the duration of the public health emergency. The publication of these FAQs instantaneously prompted additional questions from plan sponsors about implementation. On February 4, 2022, the Departments published additional FAQs to address some common questions.

Direct-to-Consumer Shipping and Direct Coverage Programs

The new guidance clarifies that plans do have a fair amount of flexibility as to how they establish direct coverage programs that comply with the direct coverage safe harbor. Generally, a direct coverage program is required to have at least one direct-to-consumer shipping mechanism and at least one in-person mechanism. A shipping program can allow for orders to be placed online or by telephone and may be provided through a pharmacy or other retailer. A common question to the Departments from plan sponsors related to the coverage of shipping costs. In response, the Departments stated that plans must cover reasonable shipping costs related to OTC COVID-19 tests "in a manner consistent with other items or products provided by the plan or issuer via mail order." Whether there are an adequate number of locations for the in-person component will be based on relevant facts and circumstances. The Departments noted that they may request information from plans to ensure that participants have adequate access to OTC COVID-19 tests, including the number and locations of in-person options. This guidance applies prospectively as of the date of publication of the FAQs (i.e., February 4, 2022).

Supply Shortages

Plans taking advantage of the direct coverage safe harbor will not be considered out of compliance if they have a program in place that otherwise meets the safe harbor requirements but is unable to provide adequate access due to supply shortages. In this circumstance, the FAQs clarify that plans may continue to limit reimbursement to $12 per test (or the full cost of the test, if lower) for OTC COVID-19 tests purchased outside of the program.

Fraud, Samples Requiring Laboratories, and FSA/HRA/HSA Considerations

The additional FAQs also provided further clarity on other issues, including the following ones.

Fraud. Plans can take reasonable steps to prevent fraud as it relates to coverage of OTC COVID-19 tests. For example, a plan can disallow reimbursement for tests that are purchased from a private individual. This could be accomplished by requiring a UPC code or a receipt as documentation. If a plan has a policy that disallows reimbursement from certain resellers, the plan should provide information to participants regarding the types of retailers (e.g. retail pharmacy locations, grocery stores, etc.) that provide tests that are generally covered and about the types of resellers that would not be eligible for reimbursement (e.g. eBay, Craigslist).

Self-Collected Samples Processed by Laboratories. The FAQs clarify that OTC COVID-19 tests that are taken at home without a prescription but then are sent to a laboratory for analysis/diagnosis are not covered under these requirements. The tests covered by the FAQs are tests that are taken and interpreted at home. However, such a test requiring laboratory involvement may be required to be covered under the Families First Coronavirus Response Act if it is ordered by a health care provider.

Other Reimbursement. Although the cost of OTC COVID-19 tests is a medical expense that would be reimbursable by health FSAs and HRAs, an individual cannot be reimbursed more than once for the same medical expense. The FAQs suggest that plans may want to notify individuals not to seek reimbursement from their Health FSAs or HRAs for the cost of OTC COVID-19 tests paid for by the plan and not to use an FSA or HRA debit card to purchase OTC COVID-19 tests that they intend to have covered by their group health plan.

In addition, the FAQs note that if an OTC COVID-19 test was paid for or reimbursed by a group health plan, it is not a qualifying medical expense under an HSA. Therefore, if an individual takes an HSA distribution for an OTC COVID-19 test that was covered by his or her plan, the individual will need to (1) include the distribution as gross income, or (2) if permitted, repay the distribution to the HSA.

Next Steps

Nothing in the new FAQs modifies or delays the core requirements of OTC COVID-19 testing coverage or the initial FAQs issued. Therefore, employers, to the extent they have not already done so, should continue to act rapidly to ensure that their group health plans are complying with the new requirement taking into account this additional guidance.


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