Guidance Issued on Over-the-Counter COVID-19 Testing Coverage

Effective January 15, 2022, employer health plans must include coverage for over-the-counter (OTC) COVID-19 testing in accordance with new FAQs.


January 13, 2022

As part of his “Winter Plan,” President Biden announced on December 2, 2021 that employer health plans would be required to cover over-the-counter (OTC) COVID-19 tests. On Monday, January 10, 2022, the Tri-Departments (DOL/EBSA, Treasury/IRS, and HHS) issued FAQs that provide a high-level framework for employers and insurance issuers to follow in providing OTC test coverage, effective January 15, 2022 through the end of the public health emergency. These FAQs provide two safe harbors aimed at balancing competing stakeholder priorities while focusing on ensuring individuals have cost-free access to covered OTC COVID-19 tests.

Overall, the FAQs attempt to give flexibility for employers and their vendors to provide the “coverage” in a number of different ways. However, we expect employers to be heavily reliant on vendors, including carriers, TPAs, and PBMs to facilitate the coverage and satisfy the safe harbor requirements in order to limit non-compliance and claims expense exposure. In particular, the “direct coverage” safe harbor under Q#2 (details provided below) may be quite challenging for employers to meet or meaningfully attempt to meet in the near term and presents almost no opportunity for most employers to satisfy the requirements unilaterally. Employer- sponsored plans should consult with their legal counsel to ensure they are appropriately working to meet these nuanced requirements in the short time provided.

Key takeaways from FAQ Part 51

Basic coverage requirement is a broad, fully plan-paid reimbursement. The FAQs begin by reviewing the statutes and prior guidance, and clarifying that no individual assessment or provider test order is required for OTC test coverage (unlike lab-based testing). The FAQs illustrate the breadth and generality of the requirement to cover testing under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This includes a broad range of diagnostic items and services that plans must cover without any cost-sharing requirements, prior authorization, or other medical management requirements. Essentially, at its most basic, plans are required to cover the full cost, either up front or through reimbursement, of any FDA-approved or authorized COVID-19 OTC tests that are primarily for the purpose of diagnosis. This means, consistent with prior guidance, that tests acquired for other purposes, such as employment (e.g., under the OSHA ETS) are not required to be covered.

Plans may narrow some coverage elements if certain requirements are met. In recognition of the challenges facing plans, the Departments provide allowances for plan processes and limitations to avoid fraud and abuse, and to incentivize certain plan terms and capabilities. The first two guardrails listed below appear to be widely applicable and available for most plans to implement. The applicability of the last one, Q#2 Safe Harbor, however, will depend on many factors, including supply chain stability and substantive and timely delivery by third-parties.

  • Fraud and abuse controls. While medical management is prohibited, plans may implement reasonable controls to help ensure that the covered OTC tests are for personal use of the covered individuals. For example: Q#4 allows plans to require a brief attestation and/or proof of purchase.
  • Q#3 Safe Harbor – 8 OTC tests per covered individual per month (or 30-day period).

    The plan may limit the number of OTC COVID-19 tests as long as the plan does not impose cost sharing, prior authorization or other medical management requirements (beyond fraud and abuse controls). These limits are set to 8 OTC tests per calendar month (or 30-day period) for each covered person and do not apply to other testing administered with a medical provider’s involvement or prescription.

    The plan may choose whether to use a calendar month or 30-day period. There cannot, however, be gating limits on the acquisition – e.g., 4 tests per 15-day period. Also note, a multi-pack of OTC tests would be counted individually; e.g., a single two-pack of tests would be counted as two tests.

  • Q#2 Safe Harbor – Plans with adequate “direct coverage” through preferred or participating providers can limit non-preferred or non-participating payments to $12 per test.

    Although the basic requirement is for the plan to reimburse covered individuals for whatever the cash price of the OTC COVID-19 test is, the Departments have created an incentive for plans to establish OTC test coverage without any up-front out-of-pocket expense. The Departments have defined the provision of OTC tests for no up-front cost to the individual as “direct coverage” (described further below). For plans able to establish “direct coverage” they can limit their payments for OTC COVID-19 tests acquired outside of the “direct coverage” channel to the lesser of the actual cash price of the test or $12 per test (note: this too applies to multi-packs, so a two-pack of tests would be limited to up to $24)

    This safe harbor relies on the plan establishing “direct coverage” – a new term meaning the covered individual would have access to OTC tests for free at the point-of-purchase at a pharmacy, retailer, online distributor, or even provided at the worksite. The Departments see direct coverage as a preferred alternative to individuals seeking reimbursement post-purchase and hope plans and their vendors will invest in providing it so that they can avail themselves of the $12 per test limit for otherwise acquired OTC tests. This may be similar to other point-of-purchase auto-adjudication functionalities, but employers will generally be reliant on vendors to put it into place for OTC COVID-19 tests.

    Additionally, the plan must take reasonable steps to ensure that covered individuals have “adequate access” to OTC COVID-19 tests through in-person and online retail locations. Employers may use a combination of vendors or their own resources to meet the direct coverage requirements. In particular, we have heard from a number of employers that intend to purchase and distribute OTC tests periodically and/or by request. It appears this approach may be considered as part of a plan’s “direct coverage” provisions. Whether adequate access exists will be determined under a review of relevant facts and circumstances applicable to each employer. For example, an employer with a local workforce in one region of the U.S. may be able to show adequate access by ensuring local pharmacies and retailers (as well as at least some online access) are participating, versus focusing on retailers in distant areas of the country.

    For large self-insured employers, we expect an immediate, heavy focus and reliance on existing vendor relationships with ASO providers, TPAs, and PBMs to utilize this Q#2 safe harbor.

The Departments are continuing to consider additional adjustments to the Q#2 safe harbor as well as other approaches to the coverage requirements generally. Business Group on Health has been active in these discussions and will focus on practical assurances and protections for employers, given their reliance on vendors and the potential for extraordinary expenses in providing this coverage without the Q#2 and Q#3 safe harbors.

Required and permitted plan communications. The guidance requires plans to provide covered individuals with information about these new coverage provisions, including the procedures for seeking reimbursement from the plan for purchased OTC COVID-19 test. For plans that establish direct coverage, covered individuals should be made aware of key information needed to access the plans without any up-front costs, including dates of availability and participating in-person retailers and online locations. The guidance also allows (but does not require) employers to provide education about OTC COVID-19 testing, including quality information, effective use of the tests and the differences between the types of tests.

FAQ Guidance Unrelated to OTC Testing Coverage – Coverage of Preventive Services

The FAQs also include additional guidance about certain preventive care coverage for colonoscopies and clarifications regarding coverage for FDA-approved contraceptive products under the HRSA Women’s Preventive Services Guidelines. These are detailed and plan specific new terms, so we suggest you review them with counsel or plan consultants to see how they align with or would require plan adjustments.

Business Group on Health is continuing to raise and discuss employer issues with the Departments on the OTC test coverage and other matters. We expect additional opportunities and adjustments to the FAQs as implementation challenges arise. We welcome member input so that we can help ensure the Departments are aware of impediments and the needs of employer plan sponsors. For any questions or comments, please feel free to contact Garrett Hohimer, Director, Policy & Advocacy at (note that with the holidays imminent response times may be delayed).

We provide this material for informational purposes only; it is not a substitute for legal advice.

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