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In an effort to expand the availability of free COVID-19 testing, the Biden-Harris Administration has announced that beginning January 15, 2022, insurance companies and group health plans will be required to cover the cost of over-the-counter (“OTC”) COVID-19 tests. This requirement is being implemented through joint FAQs published by the Departments of Labor, Health and Human Services, and the Treasury (collectively, the “Departments”). A full summary of the new requirement is below.

Key Takeaways

• Applies only to individual private health coverage and group health plans and OTC COVID tests that are authorized, cleared, or approved by the U.S. Food and Drug Administration (“FDA”).
• OTC COVID test purchases must be covered without any cost-sharing (e.g., deductibles, co-payments, or coinsurance), prior authorization, or other medical management requirements; and without a requirement for a provider’s order or individualized clinical assessment.
• Safe harbor provisions for plans providing up-front coverage of no less than eight OTC COVID tests per covered individual per month (e.g., a family of four would be entitled to 32 tests a month) and limiting reimbursement to no less than $12 per test or actual cost, whichever is lower.
• OTC COVID tests ordered by a health care provider following a clinical assessment do not count toward the eight-test monthly limit.

Summary

FAQs Part 51, published by the Departments on January 10th, requires plans to cover OTC COVID tests purchased for personal use without an order from or individualized assessment by an attending healthcare provider, and without any out-of-pocket expense or prior authorization requirements. The new coverage requirement goes into effect on, and will apply to OTC tests purchased on or after, January 15, 2022, and will continue for the duration of the public health emergency.

To comply with Part 51, plans can elect to directly reimburse sellers of OTC COVID tests (“direct coverage”) or reimburse insureds post-purchase. To encourage plans to provide direct coverage, Part 51 has two safe harbor provisions that allow a plan to limit reimbursement for OTC COVID tests to $12 per test and coverage to eight tests per covered individual per month.

Under the first safe harbor (the “Q2 Safe Harbor”), the Departments will not take any action related to the coverage of OTC COVID tests against any plan that: (1) provides direct coverage through both its pharmacy network and a direct-to-consumer shipping program; and (2) limits reimbursement for OTC COVID tests to no less than the actual price or $12 per test, whichever is lower. This safe harbor further prohibits plans from requiring any up-front out-of-pocket contribution from the insured or imposing any prior authorization or other medical management requirements; and requires plans to take reasonable steps to ensure covered individuals have adequate access to OTC COVID tests through an adequate number of in-person and online retail locations.

If a plan relying on the Q2 Safe Harbor is unable to meet its obligations to cover the OTC COVID tests (e.g., significant delays in individuals receiving tests from direct-to-consumer programs), then the plan cannot deny coverage or take advantage of the reimbursement limits for tests purchased by individuals, whether purchased from preferred sellers or otherwise.

Under the second safe harbor (the “Q3 Safe Harbor”), the Departments will not take any enforcement action against a plan that limits the number of covered OTC COVID tests to no less than eight tests per covered individual per month (or other 30-day period). The Q3 Safe Harbor prohibits plans from limiting the number of tests covered over a shorter period (e.g., 4 tests per 15-day period), but allows plans to set more generous limits. OTC COVID tests administered with a health care provider’s involvement or prescription do not count toward the monthly eight-test limit.

Earlier today, President Biden announced a forthcoming plan to provide free access to high-quality masks. No details were provided, but it is possible this will be accomplished through a similar coverage mandate. We will provide additional information as soon as the President reveals his plan, which should be next week.