Department of Labor Issues Rules for Health Plan Coverage of OTC COVID Tests

Just before the holidays, the Biden administration announced a policy requiring group health plans and health insurance issuers to cover over-the-counter (OTC) COVID-19 tests (also known as at-home or self-administered tests) with no cost to plan participants. In that announcement, President Biden required the Department of Labor (DOL) to issue implementing guidance by January 15, 2022. That guidance was published late on January 10 in the form of detailed FAQs.

This guidance has employers, health insurers, TPAs and pharmacy benefit managers (PBMs) moving quickly to figure out how to implement this new coverage requirement, which goes into effect Saturday, January 15, 2022. Here’s a summary of what this new guidance requires:

  • Employer-sponsored group health plans must cover the cost of at-home COVID 19 tests purchased by participants. This requirement is effective for tests purchased on or after the January 15, 2022 effective date – it does not apply retroactively.
  • At-home tests do not need to be ordered or recommended by a health care provider to be covered – if a plan participant purchases an OTC test on or after January 15, the health plan must reimburse regardless of reason.  
  • Initially, we believe (based on feedback from our insurer and TPA partners) that this will be a manual process – employees and covered family members will purchase the tests and then submit a claim for reimbursement to the insurer or TPA. However, we know that insurers, TPAs and PBMs are working on processes for direct coverage, so that the tests are covered when purchased and no claim for reimbursement must be submitted.
  • The plan must cover up to 8 OTC tests per member per month. If the only method of coverage is reimbursement to the participant, there is no cap on the cost that must be reimbursed. If the plan puts a process in place for direct coverage (plan coverage at the in-network point of purchase), then any reimbursement request outside of that is limited to no more than $12 per test. This is the administration’s incentive to health plans to provide direct coverage instead of requiring participants to pay out-of-pocket and then get reimbursed.
  • The guidance affirms that employers who have put a “vaccine-or-test” policy in place to comply with the OSHA mandate do not have to pay for COVID tests for purposes of employment. But it does muddy the waters quite a bit if employers are planning to rely on proctored home tests for compliance with the weekly testing requirement. Presumably, employees who purchased home tests to comply with the policy could still submit a reimbursement claim to the plan.
  • As has been true since the FFCRA/CARES Act were effective, the group health plan must continue to cover COVID tests administered in a professional setting (doctor’s office, lab, minute clinic, etc.) so long as the test was ordered or recommended by a health care professional.

Fortunately, this is a requirement that applies to the group health plan and not directly to employers, so employers do not need to put a process in place to directly reimburse. The coverage or reimbursement process will be handled through the group health plan. 

As a companion to the DOL technical guidance, the Centers for Medicare and Medicaid Services (CMS) issued a simplified FAQ targeted at individuals that provides guidance on obtaining OTC tests at no cost.

As mentioned, insurance companies, TPAs and PBMs are working to develop processes and coverage provisions for this new requirement. Our team will continue to provide updates as they become known. Subscribe to The Boost to remain up-to-date.

Please reach out to meKelly Eckman, or a member of your First Person team for more information on how this impacts your plan.

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