Additional Guidance Issued on Coverage for OTC COVID-19 Tests

On February 4, 2022, the Departments of Labor, Health and Human Services and the Treasury (the “Departments”) released additional Frequently Asked Questions (FAQs) regarding group health plan coverage of over-the-counter at-home COVID-19 tests (OTC Tests) plans, without participant cost-sharing, ‎preauthorization, or medical management.  The February FAQs provide clarification on the FAQs the Departments issued in January on this topic.  [See our blog GROUP HEALTH PLANS MUST PAY FOR OVER-THE-COUNTER AT-HOME ‎COVID-19 TESTS].

The recently issued FAQs clarify and expand on the initial guidance as follows:

• Flexibility in establishment of direct-to-consumer shipping option and direct coverage safe harbor. The January FAQs provided a “safe harbor” under which if the group health plan arranges for direct coverage of OTC Tests without any upfront out-of-pocket costs through both its in-person pharmacy network and a direct-to-consumer shipping program, the plan can limit reimbursement for OTC Tests purchased from non-preferred ‎pharmacies or retailers to $12 per test or the cost of the test, whichever is less. The February FAQs provide greater flexibility in how group health plans can provide adequate access to OTC Tests through its direct coverage program.  For example, a direct-to-consumer shipping program can include online or telephone ordering and may be provided through a pharmacy or other retailer, the plan directly, or any other entity on behalf of the plan or entity.  The February FAQs note that a direct-to-consumer shipping program does not have to provide exclusive access through one entity, as long as it allows participants to place an order for OTC Tests to be shipped directly to them.  For example, if the plan has opted to provide direct in-person coverage of OTC Tests through specified retailers, and those retailers maintain online platforms where individuals can also order tests to be delivered to them, the Departments will consider the plan to have provided a direct-to-consumer shipping option.
• Coverage of Shipping Costs. The February FAQs clarify that when OTC Tests are provided through a direct-to-consumer shipping program, the plan must cover reasonable shipping costs related to the OTC Tests in a manner consistent with other items or products provided by the plan via mail order.  However, a plan that meets the requirements of the safe harbor may limit the total reimbursement to $12 per test (or the full cost of the test, if less) for OTC Tests purchased outside of the direct coverage program, including shipping and sales tax.
• Supply Shortage Issues.  The February FAQs clarify that a group health plan will not be out of compliance with the safe harbor if it established a compliant direct coverage program but is temporarily unable to provide adequate access due to a supply shortage of OTC Tests.  If this happens, the plan can limit reimbursement to $12 (or the full cost, whichever is lower) for OTC Tests purchased outside of the direct coverage program.
• Fraud and Abuse. Plans can establish a policy that limits coverage of OTC Tests to tests purchased from established retailers that would typically be expected to sell OTC Tests.  Plans may disallow reimbursement for OTC Tests purchase from a private individuals, online auctions or resale marketplaces.
• Home Collection PCR Tests. The February FAQs clarify that group health plans are not required to cover COVID-19 tests that use a self-collected sample but require processing by a laboratory or health care provider.  However, these types of tests may be covered by other Department guidance.
• Impact on FSA, HRA and HSAs. The February FAQs note that the cost of OTC Tests purchased by an individual is a medical expense that is reimbursable by a health flexible spending arrangement (FSA) and health reimbursement arrangement (HRA).  However, since an individual cannot be reimbursed more than once for the same expense, OTC Tests that are paid or reimbursed by a group health plan cannot be reimbursed by a health FSA or HRA.  Similarly, expenses incurred for OTC Tests paid or reimbursed by a plan are not qualified medical expenses for purposes of distributions from an individual’s health savings account (HSA).  If an individual mistakenly receives reimbursement from the FSA or HRA for OTC Tests that have been reimbursed by the group health plan, the individual will need to correct the erroneous reimbursement in accordance with the plan’s correction procedures.  Employers may wish to advise individuals not to use a health FSA or HRA debit card to purchase OTC Tests for which the individual intends to seek reimbursement from the group health plan.

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