COVID-19 relief legislation requires employer-sponsored group health plans to cover certain testing and related items without cost sharing. Agency guidance has elaborated on these requirements and created new flexibilities to encourage COVID-19 diagnosis and treatment. Plans can expand access to healthcare through telehealth and other remote mechanisms that minimize opportunities for virus transmission. This GRIST discusses these federal health coverage requirements and flexibilities, implementation issues, and open questions. Additional guidance has expected as the pandemic continues to be fundamentally affect the US healthcare system and economy.
The COVID-19 pandemic has ushered in temporary but unprecedented regulatory changes that impact health coverage nationwide. The Families First Coronavirus Response Act (FFCRA) (Pub. L. No. 116-127) requires coverage of COVID testing across all parts of the health system, including employer-sponsored plans. The Coronavirus Aid, Relief and Economic Security (CARES) Act (Pub. L. No. 116-136) expands the FFCRA’s COVID-19 diagnostic coverage requirements to add reimbursement standards and mandate coverage of preventive care like vaccines, once available. The departments of Labor (DOL), Health and Human Services (HHS), and Treasury have issued FAQs (Part 42) to implement these health coverage provisions for group health plans and issuers.
Effective March 18, all group health plans — whether self-insured, fully insured, grandfathered or nongrandfathered — must cover COVID-19 testing and related services without cost sharing. This coverage mandate applies for the duration of the public health emergency, currently slated to last through July 24, unless ended earlier or extended by the HHS secretary.
The mandate includes state and local government plans and church plans. It also applies to individual coverage purchased on or off the public health insurance exchanges; student health insurance; and “grandmothered” health plans — transitional plans that have until 2021 to meet certain Affordable Care Act (ACA) standards — in the individual and small-group markets. However, the mandate does not apply to excepted benefits; retiree-only plans; or short-term, limited-duration coverage.
Plans and issuers subject to the law must provide coverage meeting the following standards:
The FAQs discuss reimbursement for the diagnostic test provider, but do not distinguish between the provider of the test and the provider of related items and services. If a plan had a negotiated rate with a diagnostic test provider in effect before the public health emergency, the provider must receive that rate throughout the emergency. If a plan has no prenegotiated rate with the test provider (referred to as an out-of-network provider in the FAQs), the plan must reimburse the “cash price for such service” listed on the provider’s public website or negotiate a lesser price. The CARES Act requires all testing providers to post the cash price for a COVID-19 diagnostic test or risk a civil penalty of up to $300 per day. No similar provision requires posting the cash price for related items and services.
Federal law does not mandate that large employer-sponsored plans cover COVID-19 treatment. While the virus does not have a specific treatment, the current care regimens are considered essential health benefits (EHBs) that individual and small-group insurance plans must cover under ACA rules. Recent FAQs from the Centers for Medicare & Medicaid Services (CMS) confirm that EHBs include coverage for COVID-19 diagnosis and treatment, although coverage details and cost sharing may vary by plan.
The EHB rules don’t apply to large group health plans, although most plans do cover the types of care — like hospitalization — that COVID-19 patients receive. Some states have issued their own directives for insured group health plans that extend the federal cost-sharing ban for COVID-19 testing to include coverage of treatment without cost sharing. In addition, many insurers are voluntarily offering to cover COVID-19 care without cost sharing under their plans for insured and self-insured employers. While these changes automatically apply to insured group health plans, self-insured plan sponsors will need to decide whether to adopt no-cost COVID treatment provisions.
The CARES Act requires group health plans and issuers to cover a COVID-19 vaccine or other preventive service — once available — without cost sharing in a more expedited timeframe than normally required for coverage of new ACA preventive care items. Under the ACA, nongrandfathered group health plans must extend cost-free coverage for new preventive services by the plan year that begins one year after the last day of the month in which the US Preventive Services Task Force (USPSTF) makes the recommendation. Once COVID-19 preventive care is available, plans will need to cover it without cost sharing within 15 days of the recommendation from the USPSTF or the Centers for Disease Control and Prevention (CDC). The ACA’s preventive care rules only apply to nongrandfathered plans, and the language in the CARES Act suggests only those plans will have to provide cost-free coverage of COVID-19 preventive services.
Federal regulators have provided new flexibilities to help expand access to healthcare and coverage. Some of these changes are temporary, while others are permanent clarifications of existing law.
The CARES Act provides a temporary safe harbor allowing high-deductible health plans (HDHPs) to cover telehealth and other remote care services before participants have met their deductibles. The act also provides that having telehealth coverage outside of an HDHP will not make an individual ineligible for HSA contributions. This expansion of permissible telehealth for individuals with HDHPs and HSAs applies to all types of care, not just COVID-19 care. These changes took effect March 27, 2020, but only apply for plan years beginning on or before Dec. 31, 2021. So for calendar-year arrangements, the temporary changes expire Dec. 31, 2021.
Notice 2020-15. The CARES Act’s telehealth provisions differ from other COVID-19 relief for HDHPs under IRS Notice 2020-15. The notice allows HDHPs to cover COVID-19 testing and treatment before individuals have met their deductibles, without affecting eligibility for HSA contributions. Unlike the CARES Act’s telehealth provisions, the relief under Notice 2020-15 does not have an expiration date. Although the notice states that it is meant to facilitate the response to COVID-19, the relief remains in effect until further guidance is issued.
In sum, predeductible telehealth coverage of COVID-19 testing and treatment is permissible for HDHP participants until further notice. In contrast, other predeductible telehealth coverage is only permissible for HDHPs through 2021 (or plan year-end in 2022 for noncalendar-year plans).
Many employers want to ensure that their employees can access COVID testing and treatment, even if they are not covered by the group health plan. The FAQs confirm that EAPs and on-site medical clinics can provide COVID-19 diagnosis and testing without losing excepted-benefit status.
This confirmation relieves concerns that providing COVID-19 testing and diagnostic services to employees not enrolled or eligible for health coverage could cause an EAP or an on-site medical clinic to become subject to the full scope of ERISA and the ACA rules. However, when limited coverage is considered an excepted benefit, employers face fewer compliance obligations. This could open up access to COVID-19 testing and/or care for all employees, whether covered by the group health plan or not.
The FAQs discuss two opportunities to provide COVID-19 services as an excepted benefit:
Employers sponsoring health plans must implement these coverage changes, while making other difficult decisions due to the pandemic — including decisions on workforce changes (such as furloughs, layoffs or reductions in hours); health coverage continuation for impacted employees; CARES Act relief opportunities; and other issues. Employers implementing the health coverage requirements should review the FAQs and keep a number of key issues in mind.
Mandated benefits. Plan sponsors will want to make sure their third-party administrators (TPAs) are properly processing claims — dating back to March 18 — to cover COVID-19 testing and related services without cost sharing, as mandated by the relief legislation:
Benefit reduction. The FAQs state that the agencies could take enforcement action against plans and issuers that make midyear changes to limit or eliminate benefits or increase cost sharing for other benefits to offset the expense of covering COVID-19 tests and related services without cost sharing.
Telehealth. The CARES Act’s temporary safe harbor and the relief in Notice 2020-15 provide new opportunities for employers sponsoring HDHPs with HSAs to encourage employees’ use of telemedicine. Plans may wish to add a separate telehealth benefit and promote its ability to meet many healthcare needs during the pandemic. Nevertheless, employer sponsors should be cautious about making a stand-alone telehealth program available to all employees, regardless of enrollment in the group health plan. A robust telehealth program, unlike a limited excepted-benefit EAP, might be subject to all ERISA and ACA requirements.
Excepted benefits. Some employers may consider adding COVID-19 tests, including antibody testing, as a temporary EAP benefit or a permanent offering through an on-site medical clinic. This testing could become part of a return-to-work strategy. Employers will want to partner with or seek advice from clinical experts on which test to offer, particularly since the efficacy of some tests rushed to market may be in question. Alternatively, an excepted-benefit EAP or an on-site clinic could conduct a telehealth evaluation of an employee’s symptoms and arrange for COVID-19 testing elsewhere. Employers can decide what services — whether COVID-19 related or not — to provide through an on-site clinic, without jeopardizing its excepted-benefit status. In addition, no federal restrictions appear to prevent on-site clinics from providing telehealth services, including to evaluate an employee for COVID-19 testing or to care for an employee working from home. However, an on-site clinic’s telemedicine services could create problems for HDHP participants — for example, if predeductible telehealth coverage continues after the public health emergency and the CARES Act’s temporary safe harbor end.
The FFRCA does not include any notice requirements specific to the COVID-19 coverage mandate, but ERISA health plans must comply with existing disclosure rules, including the summary of benefits and coverage (SBC), summary of material modifications (SMM), and summary plan description (SPD).
Enforcement safe harbor for SBCs. Plans usually must provide updated SBCs reflecting any benefit change to prior SBC content no later than 60 days before the change will take effect. This requirement is, of course, impractical during this pandemic, even though communications with employees are key. According to the FAQs, a plan that communicates the mandated COVID-19 coverage terms as soon as possible — via an updated SBC or a separate communication — won’t face enforcement action for failing to provide 60 days’ advance notice of the change. Plans must comply with normal requirements to update documents or coverage terms if these benefit changes remain in place beyond the emergency period.
This temporary nonenforcement policy also applies to plans voluntarily enhancing benefits, such as to add telehealth and other remote care services or to reduce or eliminate cost sharing for such services. To encourage employees to seek care safely as part of a strategy to fight the virus and return employees to work, plans should consider providing information on telehealth options in the notice about the new coverage for COVID-19 testing and preventive services without cost sharing.
Other document changes. The FAQs do not address SMMs or updated SPDs, which are typically not required until long after a plan has made benefit modifications. Because the COVID-19 coverage mandates — with the exception of preventive care, once available — are temporary, the benefit changes may no longer be in place when the deadline to issue an SMM or updated SPD arrives. In that scenario, the notice about the temporary changes might serve as the SMM. Sponsors keeping the mandated benefit changes beyond the public health emergency and/or adding new benefits like telehealth for a longer period will have to distribute SMMs or revised SPDs and update other plan documents or coverage terms. Even some temporary changes might warrant a plan amendment for legal and operational purposes.
Many plan sponsors are concerned about employees lacking health coverage and may want to ensure they have access to care beyond just COVID-19 evaluation, testing and perhaps limited treatment available through an EAP or on-site health clinic. Options include the following:
Unlike uninsured employees, employees enrolled in an employer-sponsored health plan who lose that coverage due to a layoff or furlough have the option to enroll in COBRA coverage or special-enroll on any public insurance exchange, including Healthcare.gov. COBRA coverage is generally effective retroactive to the date of coverage loss, while public exchange coverage obtained through special enrollment is prospective only. As a result, employees losing coverage due to job loss might have a gap before their exchange coverage is effective. Employers will want to keep this in mind in deciding when to end coverage for a furloughed or laid-off worker. Temporarily extending existing employer coverage after job loss allows time for exchange coverage to take effect without coverage gaps.
Regulators are expected to issue additional guidance to clarify existing ambiguities and may offer new flexibilities to help health plans address the next phase of the pandemic. In the meantime, here are some actions for employers:
Watch for additional guidance addressing compliance ambiguities and the operational and practical challenges of implementing no-cost-sharing coverage of COVID-19 testing and related items and services.