On Monday, the government issued frequently asked questions (FAQs) requiring employer group health plans (Plans) and health insurance issuers to cover certain over-the-counter (OTC) COVID-19 tests at no cost to the individual. This new coverage requirement is effective January 15, 2022. This client alert discusses the details of the new coverage requirement. (Our previous alerts regarding COVID-19 testing can be found here and here.)

Which OTC COVID-19 Tests Must Plans Cover?

Plans must cover 100% of the cost of OTC COVID-19 tests that meet all of the following requirements:

  • Timing. The test must be purchased on or after January 15, 2022, and during the public health emergency.
  • Approval. The test must: (i) be approved by the FDA, (ii) have a pending or forthcoming application for an emergency use authorization, (iii) be approved by certain state authorities, or (iv) be approved by HHS.
  • Purpose. The test must be used for individualized diagnosis or treatment purposes. Plans are not required to cover testing for employment or public health surveillance purposes. As discussed below, Plans may require an attestation that the test was used for an appropriate purpose.

What Limitations and Conditions May Plans Impose?

Quantity/Frequency. Plans may limit coverage to 8 OTC COVID-19 tests per enrollee per 30-day period (or per calendar month), provided that the plan pays 100% of the cost.

  • Plans cannot impose lower quantity/frequency limitations. For example, a plan cannot cover 4 tests every 15 days.
  • With respect to these 8 tests, Plans cannot require enrollees to pay any portion of the cost of the test (no deductible, copayment, or coinsurance).
  • Enrollees may purchase packages containing more than one test. If so, the limitation applies separately to each test. An enrollee is entitled to 8 tests—not 8 packages with 2 tests each.

Source/Cost. Plans may not limit coverage to OTC COVID-19 tests purchased from in-network pharmacies, providers, or retailers. However, Plans are not required to cover 100% of the cost of tests purchased from out-of-network sources, if the Plan has a safe harbor program that meets all of the following requirements:

  • The Plan must provide direct coverage of OTC COVID-19 tests from its in-network pharmacies. "Direct coverage" means that the Plan reimburses the seller directly, without requiring an enrollee to submit a claim for reimbursement.
  • The Plan must also provide direct coverage of OTC COVID-19 tests through a direct-to-consumer shipping program with one or more preferred vendors.
  • For OTC COVID-19 tests obtained from out-of-network pharmacies or outside of the direct-to-consumer shipping program, the Plan must cover at least $12 per test, or the actual price of the test, whichever is less. If an enrollee purchases a package enclosing two or more tests, the cost limitation must be applied separately to each test.
  • The Plan must ensure access to OTC COVID-19 tests at an adequate number of in-person and online retail locations. If the Plan is unable to do so (for example, because of shipping delays in the direct-to-consumer program), the Plan cannot impose the source/cost limitations mentioned above.

Type of Test. Plans cannot limit coverage to only certain types of OTC COVID-19 tests. For example, a Plan cannot decide to cover only antigen tests. Similarly, Plans cannot cover only OTC COVID-19 tests with certain types of approvals. For example, a Plan cannot decide to cover only tests approved by the FDA—a Plan must cover a test with any of the four "approvals" described above.

Medical Management. Plans cannot condition coverage of an OTC COVID-19 test on an order or individualized clinical assessment from a health care provider. Plans cannot require pre-authorization or impose other medical management requirements.

How Can Plans Prevent Fraud and Abuse?

Plans may impose reasonable administrative procedures to ensure that an OTC COVID-19 test was purchased for the enrollee's personal use (not for resale) and for diagnostic purposes (not for surveillance purposes). The FAQs indicate it would be reasonable to require enrollees to sign a brief attestation to this effect. However, the FAQs also indicate that it would not be reasonable to require multiple documents or numerous steps that delay reimbursement.

Plans may require proof of purchase or a receipt to establish that the item is covered, the purchase price, and the date of purchase. We anticipate that Plans will need to require these items to apply quantity, frequency, and price limitations, which are calculated based on the number of individual tests, even where a single package contains multiple tests.

A Closing Note

Plans must still cover most COVID-19 tests administered pursuant to a provider's direction or prescription. The FAQs do not change that requirement. The limitations and conditions discussed in this alert apply only to OTC COVID-19 tests administered without a provider's direction or prescription.