Effective January 15, 2022, Insurers Required to Pay or Reimburse for At-Home COVID-19 Tests

On January 10, 2022, the Biden Administration announced new guidance that will require group health insurance plans and insurers to cover the cost of Over-The-Counter, at-home COVID-19 tests (OTC COVID tests) beginning on January 15, 2022. This guidance applies to both fully-insured and self-funded plans. Both the U.S. Department of Labor (DOL) and the Centers for Medicare and Medicaid Services (CMS) have issued Frequently Asked Question (FAQ) guidance regarding this requirement.

Under the guidance issued by the DOL and CMS (together, the Departments), individuals with private health insurance coverage or are covered by a group health plan who purchase an OTC COVID test that is either authorized, cleared, or approved by the U.S. Food and Drug Administration (FDA) or has Emergency Use Authorization will have the cost of those tests covered by their insurance without cost-sharing. Plans are required to cover up to 8 free OTC COVID tests per covered individual per 30-day period or per calendar month. (This requirement applies to individual tests. A package that contains 2 tests, for example, counts as 2). Moreover, there is no limit on the number of OTC COVID tests that are covered if ordered or administered by a health care provider following an individualized clinical assessment.

The Biden Administration is also encouraging group health plans and carriers to set up programs that allow insureds to get OTC COVID tests directly through referred pharmacies, retailers, or other entities without having to submit a claim for reimbursement, as set forth in more detail, below.  

“Safe Harbor”

The guidance states that the Departments will not take enforcement action related to coverage of OTC COVID tests against any plan or issuer that provides direct coverage through both its pharmacy network and a direct-to-consumer shipping program and otherwise limits reimbursements for OTC COVID tests from non-preferred providers at no less than the actual retail price, up to a limit of $12 per individual test. (If there is more than one test per package, the maximum required reimbursement would be $12 multiplied by the number of tests in the package.) For any OTC COVID test amount beyond $12, the member will be responsible for paying the difference.

For purposes of this safe harbor, direct coverage means that the individual is not required to seek reimbursement post-purchase and is not subject to cost-sharing at the point of sale. Plans also may not impose prior authorization or medical management requirements on test purchasers, though a plan or issuer may act to prevent, detect, and address fraud and abuse. For example, a plan can take reasonable steps to ensure that the OTC COVID test was purchased for the individuals own personal use or that of another covered individual in their family. Health plans are allowed under the federal guidance to require a brief attestation that the OTC COVID test was purchased for personal use and not for employment purposes, is not being reimbursed by another source, and is not for resale. However, plans should ensure that state law does not require coverage of employer-required testing before taking that step. Plans may also require reasonable documentation of proof of purchase with a claim for reimbursement for the cost of an OTC COVID test, such as the UPC code for the test and a receipt from the seller.

Plans must also take reasonable steps to ensure adequate access to OTC COVID tests through an adequate number of retail locations, both in-person and online. The guidance also states that plans and issuers should ensure that participants, beneficiaries and enrollees are aware of key information needed to access OTC COVID testing, such as dates of availability of the direct coverage program and participating retailers or other locations. If plans or issuers are not able to meet the requirements of the safe harbor, they cannot deny coverage or impose cost sharing with respect to any OTC COVID tests (including those purchased out-of-network) during this period.

Plans are additionally required to continue to provide coverage for COVID tests that are administered with a provider’s involvement or prescription, as required by the FFCRA and the Departments prior guidance.

Insurers are not required to provide coverage without cost-sharing for tests purchased prior to January 15, 2022.

High Deductible Plans

Employers with high deductible health plans (HDHPs) should be reminded that IRS Notice 2020-15 continues to provide that a health plan that otherwise satisfies the requirements to be an HDHP under the Internal Revenue Code will not fail to be an HDHP merely because the health plan provides medical care services and items purchased related to testing and for treatment of COVID-19 prior to the satisfaction of the applicable minimum deductible. As such, those individuals will still be eligible to participate in Health Savings Accounts (HSAs) under IRS rules.

Additional Information

We are in the process of working with carriers and plans on how to put these provisions into effect on the short timeline allowed under the guidance. Please follow this space for additional updates regarding your plan.

For additional information, please refer to the following resources:

• CMS Press Release: https://www.cms.gov/newsroom/press-releases/biden-harris-administration-requires-insurance-companies-and-group-health-plans-cover-cost-home
• CMS FAQs: https://www.cms.gov/files/document/11022-faqs-otc-testing-guidance.pdf
• DOL FAQs: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-51.pdf
• AP Article: https://www.assuredpartners.com/blog/detail/bid/660/employee-benefits/covid-at-home-testing-rules-potential-impacts-to-self-funded-health-plans