Written by Anne Tyler Hall and Eric Schillinger
The impact of the 2019 Novel Coronavirus (or “COVID-19”) has been widespread in the U.S. over the last month, and the implications to employer-provided benefits are no exception. As explained in more detail below, those implications include, among others, recently issued Federal and State guidance regarding COVID-19 diagnosis and treatment cost-sharing relief (and mandates) under certain employer-sponsored group health plans:
- Internal Revenue Service (IRS) rules for high deductible health plans (HDHPs);
- State benefit mandates for fully insured group health plans; and
- Frequently Asked Questions from the Centers for Medicare and Medicaid Services (“CMS”) that address coverage on the individual and small group insurance markets.
Given the costs related to diagnosis and, more significantly, treatment of COVID-19, this new guidance may be welcome relief for employers whose primary objectives include facilitating prevention of the spread of COVID-19 while mitigating the financial burden to employees.
Economic Stimulus Bill with Impact to Benefits Likely Forthcoming
Further guidance on cost-sharing exemptions for COVID-19 related benefits for both self and fully insured employer-sponsored health plans is likely forthcoming this week. The Families First Coronavirus Response Act (the “Coronavirus Act”), an economic stimulus package for COVID-19, passed the House of Representatives last week. The Coronavirus Act is expected to pass the Senate and be signed into law by President Trump later this week. As COVID-19 concerns continue to have a significant impact on business operations and employees, employers should familiarize themselves with the new benefits-related guidance and be on the lookout for new legislative and regulatory developments.
High Deductible Health Plans and COVID-19
To mitigate employee COVID-19 screening costs, the IRS released Notice 2020-15 (the “Notice”) last week to facilitate proactive COVID-19 testing for those individuals participating in a HDHP. This relief is important because employees may be less likely to seek immediate screening over concern that the cost of claims and expenses related to COVID-19 testing and treatment if they have not yet satisfied their HDHP annual deductible (and therefore, the majority of the cost may be out-of-pocket for the employee).
Prior to the IRS’s issuance of the Notice, it was unclear whether coverage of testing and treatment for COVID-19 before an HDHP plan’s deductible is met would disqualify the HDHP (and therefore, the HSA). In an explicit effort to remove barriers to COVID-19 testing (i.e., financial disincentives), the IRS clarified that the exclusion of COVID-19-related diagnosis and treatment expenses from an HDHP deductible requirement would not jeopardize the HDHP’s status. Specifically, the IRS provided in the Notice that all COVID-19 related medical care services received and items purchased associated with testing for and treatment that are provided by a health plan pre-deductible will not jeopardize a plan’s HDHP status and the participant’s eligibility to contribute to a health savings account (HSA). The IRS clarified that vaccinations (assuming one is developed for COVID-19 and non-COVID 19 related) continue to be considered preventive care for purposes of determining whether a plan is an HDHP.
Other Self-Insured Plans and Fully Insured Plans in Certain States
The Coronavirus Act, if approved, would impose a new COVID-19 testing benefits mandate on self-insured employer health plans as well as on fully insured group health plans. In the interim, for self-insured plans (other than HDHPs), certain providers are offering employers the option to cover the cost of the COVID-19 diagnostic test. Employers under a self-insured health plan paradigm should check with their providers to determine how they are addressing cost-sharing related to COVID-19 screening. These employers should also determine what actions must be taken to elect in or out of the 2019 Novel Coronavirus testing cost-sharing programs. The following link provides a comprehensive listing of provider coverage of COVID-19 related benefits: https://www.ahip.org/health-insurance-providers-respond-to-coronavirus-covid-19/
For employers with fully insured health plans, several states, including California, New York, Maryland, and Washington are now mandating that insured health plans regulated by the Department of Managed Health Care immediately eliminate cost-sharing requirements (i.e., reduce cost-sharing to zero) for all medically necessary screening and testing for coronavirus. This means that if an individual is advised by a medical professional to be screened or tested for COVID-19, insured medical benefit plans subject to these States’ law may not charge a co-pay or deductible for services related with COVID-19, including:
- Testing,
- Screening,
- Emergency room visits, and
- Doctor’s visits.
Carriers also must ensure that the plan’s advice line/customer service representatives are adequately informed that the plan is waiving cost-sharing as described above and clearly communicate this information to participants who contact the plan seeking medically necessary screening and testing for COVID-19. The stated aim of these mandates is to alleviate concerns for potential COVID-19-infected individuals from a significant medical bill (and encourage those who are potentially infected to seek diagnosis and treatment immediately upon COVID-19 symptom detection).
The States’ mandates have limits, however. Generally, the mandates do not require insured plans to cover hospital stays for more severe COVID-19 cases. Rather, the States’ cost-sharing requirements focus on diagnosis, and not treatment, of COVID-19.
Health Plans in the Individual and Small Group Markets
On March 12, the CMS released FAQs related to COVID-19 diagnosis and treatment in the individual and small group health plan market. As background, under the Patient Protection and Affordable Care of 2010 (the “ACA”), non-grandfathered health insurance plans purchased by individuals and small employers, including qualified health plans purchased on the Exchanges, must provide coverage for ten categories of essential health benefits (EHBs). Two of these ten categories include hospitalization and laboratory services. Under current regulation, each state and the District of Columbia generally determines the specific benefits that plans in that state must cover within the ten EHB categories. This standard set of benefits determined by the state is called the EHB-benchmark plan. In its FAQ, the CMS confirmed that all 51 EHB-benchmark plans currently provide coverage for COVID-19 diagnosis and treatment. (Note, although self-funded group health plans are not required to cover EHBs, they cannot impose annual or lifetime dollar limits on EHBs. Accordingly, the inclusion of COVID-19 diagnosis and treatment in the state EHB-benchmark plans will impact self-funded group plans as well.)
Future Guidance Expected
The coming weeks are certain to bring additional COVID-19 benefits-related guidance. Hall Benefits Law will continue to provide updates on new developments as they arise, as well as other health and welfare and retirement plan considerations related to COVID-19. If you have questions related to employee benefits legal compliance, contact ERISA counsel.
Hall Benefits Law’s experienced, responsive team may be reached directly at (678) 439-6236, or you may send inquiries to admin@hallbenefitslaw.com. Updates will be posted as they become available: www.hallbenefitslaw.com.
Hall Benefits Law, LLC
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