Archived Insight | March 11, 2020
Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the entire United States to aid the nation’s healthcare community in responding to the 2019 novel coronavirus (COVID-19), as of January 27, 2020.
Recently, several state insurance departments and executive branches have also declared a state of emergency in response to COVID-19 and issued related directives with respect to state insurance programs.
A declaration of a state of emergency generally means additional federal assistance may be available and that state authorities may modify existing regulations.
But most include the requirements for insurance companies that are discussed below. That means insurance companies will be required to implement these state directives for their insured programs.
The state insurance directives do not apply to self-insured group health plans, but self-insured plans are being contacted by their administrative service organizations to make a decision about whether and how they wish to cover testing. In addition, the IRS has released guidance as to how payment for coronavirus testing and treatment affects HSA-qualified high-deductible health plans (HDHPs).
State insurance commissioners have issued directives to implement modifications to existing insurance regulations in light of COVID-19. These include:
For coverage of diagnosing or testing for COVID-19, insurers are required to waive any cost sharing (copayments, coinsurance and deductibles) for:
At this time, COVID-19 tests are offered through the CDC at no cost. As more private testing options are approved, we will monitor the cost implications.
Other coverage requirements may include:
Requirements related to prescription drugs typically include:
Sponsors of insured plans will not need to take additional steps to implement the state insurance directives. However, they may wish to request information from insurers about the effective date of the changes in order to prepare communications for plan participants and their dependents. Sponsors of some plans may need to amend their plan documents or SPDs.
Sponsors of self-insured group health plans that have an administrative services only (ASO) contract with an insurer may decide how to cover COVID-19 testing. For example, it can be covered at 100 percent with no cost sharing. Plan sponsors may wish to limit coverage to in-network providers or otherwise place medical-necessity controls on testing. ASO providers have been contacting self-insured plan sponsors with a short deadline to make a decision as to whether to cover the tests without cost sharing.
Plan sponsors should review the additional costs of such coverage, but may wish to approve paying for coronavirus testing and treatment in light of the need to remove barriers to testing and avoid administrative delays. Plan sponsors should communicate any temporary changes in plan benefits to participants. Plan sponsors should monitor ASO communications and reach out if they have not been contacted.
Implications for HSA-qualified HDHPs
Sponsors of HSA-qualified high-deductible health plans (HDHPs) may be interested in covering the COVID-19 test and other related services before the deductible is met.
On March 11, 2020, the IRS published Notice 2020-15, which provides that a high-deductible health plan (HDHP) will not fail to be an HDHP merely because it provides health benefits associated with testing for and treatment of COVID-19, whether without a deductible or with a deductible below the minimum deductible for HDHPs. The IRS also notes that vaccinations continue to be considered preventive care for purposes of determining whether a health plan is an HDHP.
The National Association of Insurance Commissioners has created a coronavirus information resource site that includes links to information about the states that have issued emergency declarations.
On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their legal counsel for legal advice.
This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.
Don't miss out. Join 16,000 others who already get the latest insights from Segal.