On April 11, 2020, the Departments of Labor, Treasury, and Health and Human Services issued new COVID-19 FAQs regarding health plans. This advisory summarizes the key components of the FAQs, including notice requirements for COVID-19 changes, warning against offsetting COVID-19 costs, encouraging use of telehealth, and clarifying COVID-19 related requirements for employer-sponsored group health plans, both insured and self-insured. In addition, we cover a recent development in Washington State requiring employers to maintain health insurance benefits for certain high-risk workers who exhaust paid time off.
Provide Summary of Material Modifications ASAP
The FAQs confirm that plans must provide participants notice of any COVID-19 related changes to group health plans as soon as reasonably practicable (in contrast to the rule requiring 60 days’ advance notice if an employer makes material modifications to its group health plan impacting, information in the summary of benefits and coverage).
The FAQs confirm no enforcement action will be taken against any plan that is modified but does not provide at least 60 days’ advance notice, but only during the period an emergency exists under applicable law. Therefore, employers should notify participants as soon as reasonably practicable of greater coverage related to the diagnosis and/or treatment of COVID-19, and any telehealth related changes (e.g., addition of telehealth component or reduced telehealth cost-sharing).
The FAQs warn that enforcement action may be taken against any plan that attempts to limit or eliminate other benefits or to increase cost-sharing to offset the costs of diagnosis and/or treatment of COVID-19.
Using Employee Assistance Programs (EAPs) for COVID-19 Diagnosis and Testing
The FAQs confirm that an EAP will not lose its “excepted benefit” status by allowing EAPs to cover COVID-19 diagnosis and testing. Specifically, an EAP will not be considered to provide benefits that are significant in the nature of medical care solely because it offers benefits for diagnosis and testing for COVID-19 while a public health emergency declaration or a national emergency declaration is in effect.
The FAQs strongly encourage all plans to promote the use of telehealth and other remote care services, including by notifying consumers of their availability and by covering them without cost-sharing or other medical management requirements. See our previous advisory for more information regarding CARES Act telehealth changes.
Requirements for Group Health Plans
The FAQs confirm the following, some of which we have discussed in a previous advisory.
- Federal mandates for COVID-19 testing apply to group health plans (both fully-insured and self-insured), grandfathered health plans, non-federal governmental plans, and church plans. The mandates do not apply to short-term limited duration insurance, excepted benefits, or retiree plans.
- Plans subject to the mandates are required to cover COVID-19 testing and items or services related to COVID-19 testing furnished during a visit (which could be at a doctor’s office, ER, or via telehealth). This applies on or after March 18, 2020, and during the applicable emergency period. The FAQs confirm there is no requirement to cover items and services not related to COVID-19 testing but clarify that blood tests to detect antibodies against the virus must be covered. In addition, the FAQs require coverage for testing related to other causes of respiratory illness (e.g., flu tests or blood tests), but only if those tests are needed to determine whether to test an individual for COVID-19 and the individual is, in fact, tested for COVID-19.
- Cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization or other medical management requirements are not permitted for COVID-19 testing and related items or services.
- Any provider of COVID-19 diagnostic testing must be reimbursed the negotiated rate or, if the plan does not have a negotiated rate with the provider, the cash price listed by the provider on a public website. (The plan or issuer may negotiate a rate with the provider that is lower than the cash price.)
Federal and State Level Mandates
There is still no federal mandate to cover COVID-19 treatment, but this may be required for insured plans under state law.
Sponsors of self-insured plans should also consider whether to cover COVID-19 treatment and should be aware of recent state-level developments. For example, on April 13, 2020, Washington Governor Inslee issued Proclamation 20-46 “High-Risk Employees – Workers’ Rights,” requiring Washington State employers to provide certain rights and protections to high-risk workers, defined by the Centers for Disease Control and Prevention as workers 65 years of age or older and workers with underlying medical conditions. Read our blog on Governor Inslee’s Proclamation here.
Among other protections, the Proclamation requires employers to maintain or continue all employer-related health insurance benefits until the high-risk worker is deemed eligible to return to work, even if the worker exhausts his or her paid leave. Although ERISA should preempt the application of this requirement to self-insured plans, the Proclamation is likely intended to interpret “health insurance benefits” broadly, and we anticipate that self-insured plans will be pressured to follow suit.
For fully insured plans, unless existing health plan policies extend insurance benefits throughout the duration of a leave of absence, whether paid or unpaid, this means employers must negotiate with their insurance carriers (or stop-loss carriers if self-insured and including these benefits) and amend plans to extend coverage for either all workers or those workers who fall within a high-risk category until the workers are able to return to work.
Employer Action Items
In light of the FAQs, employers should contact their insurance carrier or administrator to ensure required changes have been made and participants are informed of any modifications to health plans as soon as practicable. Employers should also be aware of other changes, such as state-level mandates, and any optional changes, and work with their insurer or administrator to revise their plans.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.