Effective January 15, 2022, health plans are required to cover the cost of over-the-counter (“OTC”) COVID-19 test kits obtained without a health care provider’s prescription or clinical assessment. This new requirement was announced via a series of FAQs jointly published by the Departments of Labor, Health and Human Services, and the Treasury on January 10, 2022. We describe the expanded requirements along with any available limitations in more detail below.

Expanded Coverage Requirements

Under existing law and guidance, at-home testing was already required to be covered by group health plans and health insurance issuers offering group or individual health insurance coverage, including grandfathered health plans (collectively, “health plans”), when the test was ordered by an individual’s health care provider. However, the development and authorization of COVID-19 tests that can be self-administered and self-read at home has prompted clarification that these at-home tests, whether available by prescription or OTC, must also be covered by health plans without imposing any cost-sharing, prior authorization, or other medical management requirements.

Although not requiring health plans to provide coverage by reimbursing sellers of OTC COVID-19 tests directly (rather than by reimbursing plan participants), the agencies strongly encourage health plans to provide direct coverage. Nonetheless, until such a system has been established or if direct coverage is otherwise unavailable, health plans may require an individual who purchases an OTC COVID-19 test to submit a claim for reimbursement to the plan in accordance with the plan’s reasonable internal claims procedures.

These expanded coverage requirements are effective January 15, 2022 and will expire at the end of the COVID-19 public health emergency.

Available Limitations

Types of COVID-19 Testing. The FAQs only address required coverage for OTC COVID-19 tests that meet the statutory criteria of the Families First Coronavirus Response Act (“FFCRA”)¹ and that are not otherwise ordered or prescribed by an individual’s health care provider.

Number of OTC COVID-19 Tests. Health plans may limit coverage of OTC COVID-19 tests to eight tests per covered individual per 30-day period. Health plans cannot, however, apply this limit in a narrower fashion by, for example, limiting coverage to four tests per covered individual per 15-day period. In the case of OTC COVID-19 tests that are sold in packages containing more than one test, each test may be counted separately.

Non-Preferred Pharmacies and Other Retailers. A health plan that provides for direct coverage of OTC COVID-19 tests may not limit coverage to only such tests that are provided through preferred pharmacies or retailers. However, if a health plan does provide for direct coverage of OTC COVID-19 tests and does establish a pharmacy network and a direct-to-consumer shipping program, the health plan may qualify for a “safe harbor” which will allow the plan to limit reimbursement for OTC COVID-19 tests from non-preferred sellers to the lesser of the actual price paid by the covered individual or $12 per test. Importantly, due to the extremely short period of time between the issuance of these FAQs and the effective date of this rule, it seems unlikely that most health plans will be in a position to establish a network by January 15, 2022. This is particularly problematic given that the FAQs language does not appear to put a limit or cap on the maximum amount a health plan may be forced to reimburse its participants for an OTC COVID-19 test. Additionally, note, that even if a health plan is able to establish an adequate network and direct coverage arrangement, if at any time such arrangement is unable to meet the requirements of the safe harbor (for example, if there are delays for the OTC COVID-19 tests that are significantly longer than the amount of time it takes to receive other items under the health plan’s direct-to-consumer shipping program), the health plan would still be required to provide full coverage regardless of the source (or apparently cost) of the test. 

Testing for Employment Purposes. The FAQs confirm that health plans are not required to provide coverage for testing that is for employment purposes (such as mandated weekly testing).

Anti-Fraud Measures. A health plan may take reasonable steps to ensure that an OTC COVID-19 test for which a plan participant or beneficiary seeks coverage was purchased for the individual’s own personal use, provided that such steps do not create significant barriers for plan participants and beneficiaries. Thus, for example, a health plan may require reasonable documentation of proof of purchase with a claim for reimbursement for the cost of an OTC COVID-19 test. In addition, a health plan could require an attestation that the OTC COVID-19 test was purchased by the individual for personal use, not for employment purposes, has not been (and will not be) reimbursed by another source, and is not for resale.

Next Steps 

Fully-Insured vs. Self-Insured Health Plans. As described above, due to the almost immediate effective date of these expanded requirements (January 15, 2022), self-funded health plans will be placed in a very challenging position. The cost and logistics of setting up an adequate network and direct coverage arrangement are still unknown, but we strongly recommend employers reach out to their third party administrators as soon as possible to discuss how the plan can timely and effectively implement these requirements. For employers maintaining fully-insured plans, most of the heavy lifting will be on the insurer, but we nevertheless recommend confirming timely compliance.

Plan Amendment. Health plans will need to be amended to allow for the expanded coverage requirements. Nonetheless, employers may still avail themselves of the agencies’ non-enforcement policies which allow health plans to provide for benefits for the diagnosis and treatment of COVID-19 prior to satisfying any applicable notice-of-modification requirements and without regard to otherwise applicable restrictions on mid-year changes to health insurance coverage.

The Centers for Medicare & Medicaid Services has also published its own set of related FAQs which are drafted in a more reader-friendly manner and are available here.