Coronavirus and Health Plans: Changes to Cost Sharing for COVID-19 Testing and Treatment

Employee Benefits Alert

Client Alert

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The nation’s lawmakers, government agencies, and insurance carriers are taking measures to remove financial barriers to testing and treatment for the novel coronavirus disease (COVID-19). Employers sponsoring health plans should consult their carrier (or third-party administrator for self-funded plans) regarding potential cost sharing (deductibles and co-insurance) for COVID-19 testing and treatment. Employers may need to amend their plans for this purpose. All employers should be aware of how expenses for COVID-19 testing and treatment will be handled under their health plans and should be prepared to effectively and accurately communicate this information to their employees.

States Ask or Require Carriers to Waive Cost Sharing

Some states have already taken action to either require or formally request that insurance carriers provide coverage for COVID-19 testing without cost sharing. To date, these states include Colorado, California, Delaware, Florida, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Tennessee, Vermont, Washington, and West Virginia.

Carriers and Plans Voluntarily Waive Cost Sharing

America’s Health Insurance Plans, a trade association for health insurance carriers, has announced that many of the nation’s largest health insurance carriers and third-party administrators are waiving all cost sharing for COVID-19 testing and other services under fully insured plans and are providing employers with self-funded plans the option to waive cost sharing.

IRS Permits HDHPs to Cover Testing and Treatment with No or Lower Deductible

Generally, if a high deductible health plan (HDHP) provides coverage to an employee without requiring the employee to first satisfy the minimum deductible, the employee will not be eligible to contribute to a health savings account (HSA). As an exception to this general rule, the Internal Revenue Service has announced that HDHPs may pay for COVID-19 testing and treatment without a deductible (or with a lower deductible) without affecting an individual’s eligibility to contribute to an HSA. The IRS stated that the move is intended to facilitate the nation’s response to COVID-19 by reducing administrative delays and financial disincentives that might otherwise impede testing for and treatment of COVID-19.

If you have any questions about these changes, please contact one of the attorneys in the Employee Benefits and Executive Compensation Practice Group at Bradley.