In December 2021, amid the recent surge in COVID-19 cases, President Biden announced that the U.S. Departments of Labor, Health and Human Services, and Treasury (collectively, the departments) would issue guidance to clarify that individual and group health plans must cover purchases of over-the-counter (OTC) COVID-19 tests — including at-home tests — used for diagnostic purposes during the public health emergency.

In a timely fashion, on Jan. 10, 2022, the departments issued Frequently Asked Questions (FAQs) updating their previous guidance to require coverage of OTC COVID-19 tests under section 6001 of the Families First Coronavirus Response Act (FFCRA), with or without an order or individualized clinical assessment by an attending healthcare provider. In other words, an individual no longer needs a doctor’s order or to take a COVID-19 test at a doctor’s office for health plans (including self-funded employer group health plans and insured plans) to be required to cover the cost.

More specifically, the FAQs provide that beginning Jan. 15, 2022, plans must cover OTC COVID-19 tests that “meet the statutory criteria under section 6001(a)(1) of the FFCRA” and may not impose any cost-sharing requirements, prior authorization or other medical management requirements related to the plans’ coverage of these tests.

The FAQs do not require a health plan to provide coverage by directly reimbursing sellers of OTC COVID-19 tests. Plans can require a participant who purchases an OTC COVID-19 test to use the plan’s standard claims procedures to seek reimbursement. Additionally, health plans may not limit coverage to only tests that are provided through preferred pharmacies or retailers. However, the FAQs provide for a safe harbor, whereby a plan may facilitate “direct coverage” for OTC COVID-19 tests.

Safe Harbor

The departments will not take enforcement action against a plan’s provision of COVID-19 tests where that plan: (1) provides tests by arranging for “direct coverage” of OTC COVID-19 tests that meet the statutory criteria under section 6001(a)(1) of the FFCRA through both its pharmacy network and a direct-to-consumer shipping program; and (2) limits the reimbursement for OTC COVID-19 tests from non-preferred pharmacies/retailers to no less than the actual price per test or $12 per test (whichever is less). The safe harbor remains subject to the other requirements set forth in the FAQs; the plan may not impose any prior authorization or other medical management requirements to obtain tests from a direct coverage program.

  • What About Packages? A plan must calculate reimbursement for “packages” of OTC COVID-19 tests based on the number of tests in a package (e.g., one package of three tests equals $36 reimbursement).
  • What Does “Direct Coverage” Mean? Direct coverage means that a participant is not required to seek reimbursement post-purchase; rather, a plan updates administration to process payment directly to the preferred pharmacy or retailer.
  • What Constitutes “Adequate Coverage”? Plans must take reasonable steps to ensure that participants have adequate access to OTC COVID-19 tests, through a satisfactory number of retail locations, both in person and online. Adequate access is determined on a facts-and-circumstances basis.
  • Can a Plan Set Limits? Yes, if a plan is complying with the safe harbor, there may be a limit of no less than eight tests per 30-day period (or per calendar month). The limit is applied on a per-covered-person basis; e.g., if three people are covered under a group health plan, each individual must be able to receive eight tests per month. A plan is not permitted to further restrict the number of tests available over a shorter period of time; e.g., no more than one per week, or no more than four per 15 days. However, a plan may set more generous limits, such as 10 tests per month per individual.

The departments highlighted that the goal of the safe harbor is to facilitate consumer access and provide a seamless experience obtaining free OTC COVID-19 tests. Plans should ensure participants are aware of key information needed to access OTC COVID-19 testing (e.g., dates of availability of a direct coverage program, participating retailers, participating locations).

The FAQs are clear that no matter what method a plan uses to provide OTC COVID-19 tests — reimbursement or direct coverage safe harbor — each plan may take affirmative measures to prevent, detect and address fraud and abuse, including:

  • Taking reasonable steps to ensure that an OTC COVID-19 test was purchased for the covered individual’s own use, provided such steps do not create significant barriers. For example, it could require a simple attestation that the OTC COVID-19 test was purchased for personal use and not for employment purposes, is not being reimbursed by another source, and is not for resale.
  • Requiring reasonable documentation of proof of purchase with a claim for reimbursement. For example, it could require the UPC code for the test to verify that the item is one for which coverage is required under the FFCRA, as well as a receipt from the seller documenting date of purchase and the price.

Throughout the FAQs, the departments stress the importance of participant education and adequate forms of consumer support to access and use OTC COVID-19 tests.

McGuireWoods Insight Group health plan sponsors should work with their fully insured carriers and/or third-party administrators (potentially including pharmacy benefit managers for self-funded plans) to quickly assess whether use of the safe harbor direct delivery method is preferable and set up infrastructure to implement such direct access. They should also prepare and implement participant education, and confirm reimbursement policies and practices within the parameters of current post-service claims procedures.

Importantly, the FAQs do not modify previous guidance addressing coverage for purposes not primarily intended for individualized diagnosis or treatment of COVID-19, including the guidance that plans are not required to provide coverage of testing that is for employment purposes.

McGuireWoods Insight Although the FAQs do not require group health plans to cover COVID-19 testing that is for employment purposes, the broad testing coverage mandated by the FAQs may inadvertently allow employees to obtain COVID-19 tests and use them for diagnostic purposes that have employment-related results. Employers should review current testing practices and procedures to determine whether these new requirements need to be addressed in current testing protocols and may consider any impact on employer-coordinated testing programs and/or whether simple attestation forms are useful in combating any inadvertent use.