In a time where health insurance coverage has become increasingly important to individuals, the Covid-19 implications for employer-sponsored group health plans are far reaching.
Recent federal and state guidance issued in response to the Covid-19 pandemic has sought to address employer and employee concerns regarding the coverage of (and cost-sharing for) diagnosis and treatment under group health plans. Congress, too, has passed legislation to address these concerns as well as other related Covid-19 matters, including paid and unpaid medical leave.
The recent agency guidance and expected legislation should provide welcome relief for employers and employees as concerns over the spread of Covid-19 continue to grow.
Employers, however, should be mindful that many other benefits-related compliance considerations exist beyond those addressed by the recent guidance and contemplated by upcoming legislation, such as health information privacy and security and vendor management.
Coverage of Covid-19 Diagnosis, Treatment Under High Deductible Plans
Many employees receive employer-sponsored coverage through a high deductible health plan (HDHP), a benefit design that allows such an employee (or the employer) to contribute to a health savings account (HSA) so long as the employee is not enrolled in other disqualifying coverage.
The HDHP can only cover certain services (primarily preventive care) before the minimum statutory deductible (currently $1,400 for employee-only coverage and $2,800 for family coverage) is met for the employee to remain HSA-eligible.
To facilitate access to Covid-19 screening and mitigate costs for employees who participate in an HDHP, the IRS released Notice 2020-15. Under the notice, an HDHP will not lose its status as such (i.e., remain HSA-compatible) if it covers, before the statutory deductible is met, qualifying medical care (both services and items) for the testing and treatment of Covid-19.
This relief should be an important tool to eliminate prevent employees from being discouraged to seek medically necessary Covid-19 screening simply because they have not yet satisfied their HDHP annual deductible.
Notice 2020-15 is intended to address existing uncertainty over whether Covid-19 diagnosis or treatment was considered preventive care and, therefore, eligible for pre-deductible coverage under an HDHP without disqualifying the employee’s eligibility to make HSA contributions.
Importantly, the relief in Notice 2020-15 provides that an HDHP can cover all medical care services received, and items purchased, that are associated with testing for and treatment of Covid-19 (as both the underlying services and items may be necessary for appropriate screening and treatment).
The IRS further clarified in Notice 2020-15 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.
Economic Stimulus Bill With Impact to Benefits
In addition to the IRS sub-regulatory rules in Notice 2020-15, legislation that addresses cost-sharing for Covid-19 related medical benefits (and other Covid-19 matters) is expected this week. The Families First Coronavirus Response Act (the Coronavirus Act), an economic stimulus package that addresses a wide array of Covid-19 issues, passed the House on March 14 (with technical corrections approved by the House on March 16). The Senate passed the Coronavirus Act on March 18, and President Donald Trump signed the bill hours later.
The Coronavirus Act, as currently written, would impose a new coverage mandate on both self-insured and fully insured group health plans for Covid-19 testing. In the interim, vendors of self-insured plans are offering employers the option to cover the cost of a medically necessary Covid-19 diagnostic test.
Employers that sponsor self-insured health group plans should consult with their plan vendors to determine how they address cost-sharing of Covid-19 screening expenses, including what action is required to opt into or out of such additional coverage.
State Mandates for Coverage of Covid-19 Expenses by Fully Insured Plans
Some states, including California, New York, Maryland, and Washington, have issued mandates that insured health plans eliminate cost-sharing for all medically necessary Covid-19 screening and testing. 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).
Under these state mandates, if an individual who is advised by a medical professional to be screened or tested for Covid-19, insured medical benefit plans subject to such a state law may not impose a co-payment or deductible for services related to Covid-19 screening and treatment. These services may include testing, screening, office, and emergency room visits.
Insurance carriers also must ensure that their customer service representatives are aware of the cost-sharing waiver for screening and testing of Covid-19 and communicate this information to participants who contact the plan to seek such coverage.
The mandates, however, have some limits in scope. For example, they generally do not require insured plans to cover hospital stays for more severe Covid-19 cases. Rather, the mandated cost-sharing requirements focus on diagnosis, and not treatment, of Covid-19.
Health Plans in the Individual and Small Group Markets
Also, on March 12, the Centers for Medicare and Medicaid Services (CMS) issued FAQs related to Covid-19 diagnosis and treatment in the individual and small group health plan market that are subject to the Patient Protection and Affordable Care of 2010 (ACA).
Under the ACA, non-grandfathered health insurance plans purchased by individuals and small employers (including plans offered through the federal or state exchanges), must cover 10 categories of essential health benefits (EHBs).
Two of these 10 EHB categories include hospitalization and laboratory services. Currently, all 50 states and the District of Columbia determines the specific benefits that plans in that state must cover in each of the 10 categories of EHBs by establishing what is generally referred to as the state’s “benchmark” plan.
The CMS FAQ confirmed that all 51 benchmark plans currently cover Covid-19 diagnosis and treatment expenses.
Recommendations for Employers
Other relevant considerations in the context of employer-sponsored health coverage should be considered as well, including the privacy and security rules under the Health Insurance Portability and Accountability Act of 1994, continuity of business issues for benefit plan vendors, and health coverage continuation issues under the Consolidated Omnibus Budget Reconciliation Act of 1985 for employees who laid off due to the economic downturn.
Additional Covid-19 benefits-related guidance is likely to be issued in the coming weeks. As Covid-19 concerns remain high, employers should evaluate the new benefits-related guidance and keep an eye out for new legislative and regulatory developments.
Anne Tyler Hall is principal attorney of Hall Benefits Law, named by the Law Firm 500 as the fastest-growing solo-owned boutique ERISA law firm nationally. She and her team believe that strategically designed, legally compliant benefits plans are the cornerstone to business stability and rapid growth, and they currently work with plan sponsor clients across 29 states.
Eric Schillinger serves as senior compliance counsel at Hall Benefits Law and specializes in qualified, health and welfare, and nonqualified employee benefit plans, including pension, defined contribution, deferred compensation, health care, life insurance, disability, fringe, and other employer-provided benefits. He has extensive experience in helping employers comply with the various federal and state laws applicable to those plans, such as ACA, ERISA, the Internal Revenue Code, the Securities Act of 1933, the Public Health Service Act, HIPAA, COBRA, FMLA, and Medicare.