Beginning on January 15, 2022, the United States Department of Labor (“DOL”) will require that employer-sponsored health plans cover or reimburse the costs associated with the purchase of over-the-counter (“OTC”) at-home rapid COVID-19 tests. The DOL issued guidance concerning the scope of this new requirement, and the circumstances under which the costs of such OTC tests would be covered.
The purpose of this bulletin is to advise employers of this change to health plan coverage and to advise them about the limitations on such coverage in employment contexts.
Prior DOL Guidance Concerning the Coverage of COVID-19 Tests
Previously, DOL guidance required plans and issuers to cover the costs of COVID-19 diagnostic tests performed by a licensed or authorized health care provider, or when such a provider referred an individual to be tested for COVID-19. The DOL instructed plans and issuers that they were to assume that the receipt of such tests reflected an “individualized clinical assessment,” and cover the costs associated with such COVID-19 testing.
The prior guidance expressly excluded from coverage COVID-19 testing for public health surveillance or employment purposes.
Updated DOL Guidance Expanding the Coverage of COVID-19 Tests
Under the new guidance, plans and issuers must now cover OTC COVID-19 tests[1], including tests obtained by individuals without the involvement of a health care provider.
Plans and insurers must provide such tests “without imposing any cost-sharing requirements, prior authorization, or other medical management requirements.” In other words, such tests must be provided at no cost to the participants, beneficiaries, or enrollees.
Under the new requirements, plans and issuers must cover at least eight (8) individual OTC COVID-19 tests within a 30 day period (or per calendar month) for each covered participant, beneficiary, or enrollee. Therefore, plan participant that is enrolled in a plan that covers multiple family members would be entitled to up to eight tests per month for each of the individuals covered by the plan.
Reimbursement or Direct Coverage
The updated guidance encourages plans and issuers to provide direct coverage for OTC COVID-19 tests by reimbursing sellers directly without requiring participants, beneficiaries, or enrollees to provide upfront costs. However, plans and issuers may still require that covered individuals who purchase OTC COVID-19 tests submit a claim for reimbursement from the plan or issuer.
If your plan or issuer offers direct coverage of OTC COVID-19 tests either through a preferred pharmacy network or a direct-to-consumer program, individuals are still entitled to reimbursement for tests purchased out-of-network. However, individuals are only entitled to a $12 reimbursement for such out-of-network tests.
Employers may contact their plan provider or issuer in order to determine where and how employees may purchase OTC COVID-19 tests, and how employees should submit costs for reimbursement.
Limitations on Coverage for Employment-Related Testing
Employers should note that the DOL guidance continues to provide that “plans and issuers are not required to provide coverage of testing (including an OTC COVID-19 test) that is for employment purposes.”
As a result, employers will not be able to rely on the health care plan or insurer coverage for testing required by the employer as part of a vaccination/testing policy (e.g., where the employer requires that employees be fully vaccinated or tested for COVID-19 as a condition of entering or returning to the workplace).
However, plans and insurers may cover the costs of COVID-19 tests where the testing is voluntary and employees engage in such testing “for individualized diagnosis or treatment of COVID-19.” As such, tests that are performed by employees on a voluntary basis in order to effectuate an expedited return to work following a COVID-19 diagnosis or close contact exposure may be covered.
LCW attorneys will continue to monitor guidance issued by the DOL on this subject and are available to assist employers that may have questions about these new requirements.
[1] Under Section 6001(a)(1) of the FFCRA, COVID-19 tests are any in vitro diagnostic tests for the detection of SARS-CoV-2 or the diagnosis of COVID-19 that (A) are approved, cleared, or authorized under section 510(k), 513, 515, or 564 of the Federal Food, Drug, and Cosmetic Act; (B) the developer has requested, or intends to request, emergency use authorization under section 564 of the Federal Food, Drug, and Cosmetic Act, unless and until the emergency use authorization request under such section 564 has been denied or the developer of such test does not submit a request under such section within a reasonable timeframe; (C) are developed in and authorized by a state that has notified the Secretary of HHS of its intention to review tests intended to diagnose COVID–19; or (D) are other tests that the Secretary of HHS determines appropriate in guidance.
