As employers and insurers continue to establish programs to enable participants in group health plans to receive at-home COVID-19 tests at no cost, even without a prescription, the Department of Labor (DOL) has issued additional guidance and an updated FAQ providing further clarification and flexibility to insurers and plan sponsors in providing coverage to eligible individuals.  This additional guidance is effective February 4, 2022.

As a recap, effective January 15, 2022, all insurers and other group health plans must cover all types of COVID-19 tests, including those performed or prescribed by a physician or other health care provider, and for in-home COVID-19 tests procured without a doctor’s order.  The DOL issued FAQ Part 51 to provide guidance about how insurers and plans can comply with the obligation to provide at-home COVID-19 tests at no-cost, including the establishment of two “safe harbors” that plans and insurers can follow to ensure compliance:

Safe Harbor #1

The plan or insurer can satisfy its coverage obligation by providing “direct coverage” of at-home COVID tests through network pharmacy arrangements and other direct contract arrangements, with the participant paying no up-front cost to receive COVID testing kits through these services at the counter or other points-of-service.  If a participant submits invoices for COVID tests purchased through other non-pharmacy or retailer arrangements, the insurer or plan must reimburse the participant for the cost of such COVID tests at the lessor of the actual cost of the test purchased or $12 per test (noting that if a “kit” comes with two tests per kit, the amount to be reimbursed would be up to $24 in total).

Safe Harbor #2

The plan or insurer can limit the total number of COVID tests to 8 per person, per month (or 4 kits, if the kit includes two tests).  A separate limit applies for each covered family member (e.g., a family of 4 could receive up to 32 tests per month (or 16 kits, if it includes two tests each).  There is no annual maximum limit.

FAQ Part 52 Update

On February 4, 2022, the DOL issued FAQ Part 52 to further clarify what COVID tests qualify for the no-cost coverage options under Safe Harbor #1, how a plan or insurer provides “direct coverage” of COVID-19 tests at no cost to the participant, and provides flexibility in coverage when the plan or insurer experiences supply shortages.  Lastly, the latest guidance confirms the coordination of plan coverage between the plan or insurer and related health flexible spending plans and health savings account arrangements.

Q/A-1

confirms that employers have flexibility in establishing a “direct coverage” arrangement to satisfy Safe Harbor #1 in FAQ Part 51.  At a minimum, the plan or insurer must provide at least one “direct-to-consumer shipping mechanism” and at least one “in-person mechanism.”

• A direct-to-consumer shipping mechanism is any program that provides direct coverage of over-the-counter COVID-19 tests without requiring the individual to obtain the test at an in-person location. It can include an online or telephone ordering system provided through a pharmacy network or other non-pharmacy retailer that has contracted with the insurer or plan to provide COVID-19 tests to eligible participants at no-cost at the time of ordering.

• The guidance emphasizes that systems and technology changes need to be modified to the extent necessary to ensure that pharmacy networks and retailer arrangements, including all direct-to-consumer shipping mechanisms, operate sufficiently with no upfront cost to the participant for the purchase of at-home COVID-19 test kits.

• Plans and insurers must pay for all shipping costs consistent with the plan’s mail-order shipping arrangements.

• When implementing an in-person mechanism, the plan or insurer can satisfy this requirement by offering alternative COVID-19 testing at in-person distribution sites with drive-through or walk-up testing services at no-cost to the participant. These services can also be provided through participating pharmacies and other contracted service providers available based on the locality of participants and beneficiaries and the current utilization of participants at each location.  Key information must be provided to all participants to ensure they are aware of each location and what other information they need to have available to receive COVID-19 testing coverage at no-cost.

Q/A-2

provides a crucial clarification that plans and insurers will not be deemed to violate Safe Harbor #1 if they are temporarily unable to provide over-the-counter COVID-19 tests due to supply shortages, as long as they have taken all other steps necessary to establish direct coverage arrangements in the manner required under Safe Harbor #1.  In that case, the plan or insurer can still meet its coverage responsibility by reimbursing the cost of COVID-19 tests/kits purchased outside of the prescribed direct coverage arrangement for up to $12 per test.

Q/A-3

clarifies that plans and insurers can disallow reimbursement for tests purchased by participants from a private individual via an in-person, online person-to-person sale, or any seller using online auctions or other resale marketplace arrangements.  Proof of purchase through a verified retailer with actual documentation of the item purchased will not violate the obligations set forth above or from previous guidance issued that restricts any medical management of COVID-19 coverage (see DOL FAQ Part 44).

Q/A-4 

clarifies that the type of COVID-19 tests that must be covered under FAQ Parts 51 and 52 do not include COVID-19 tests that use a self-collected sample that must be processed by a lab or other health care provider to return a valid result—the type of COVID-19 tests referred to under FAQ Parts 51 and 52 are only tests that can be self-administered and self-read without the involvement of a health care provider.

Q/A-5

also clarifies that the cost of a COVID-19 test covered under the group health plan is not eligible for reimbursement under a health flexible spending arrangement (FSA), health reimbursement arrangement (HRA), or a health savings account (HSA) for the same expense.  To the extent an individual mistakenly receives reimbursement for the same COVID-19 test costs from a health FSA, HRA, or HSA arrangement separately covered and paid through an employer’s or insurer’s group health plan, such individual would need to contact their plan administrator for correction of the error or could be subject to income tax on the amounts overpaid.

As with the previous guidance on this topic, these obligations will continue until at least the end of the current national emergency period.