States Direct Insurers to Waive Cost-Sharing for COVID-19 Testing

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At least three states have now directed insurance carriers to waive all health plan cost-sharing associated with COVID-19 testing:

1) California
2) New York
3) Washington

For any fully insured policy sitused in one of those states, employees and family members will have COVID-19 testing covered in full by the plan as a free service not subject to any deductibles, copays, or coinsurance.

California Notices:

New York Notice:

Washington Notice:

What About Other State Policies?

More states are likely to follow in the coming weeks.

Even for those states without a directive to waive COVID-19 testing cost-sharing, insurance carriers may move voluntarily to make such services available at no cost to employees and family members.

For example, Cigna announced yesterday that all fully insured policies (including fully insured employer-sponsored group health plans) will make COVID-19 testing available at no cost as a free preventive service.

As another example, the state of Oregon announced yesterday that multiple insurance carriers in the state have agreed to waive cost-sharing for COVID-19 testing.

What About Self-Insured Plans?

Self-insured health plans are not subject to state insurance mandates, which means the new state cost-sharing directives for COVID-19 will not apply.  For full details, see our prior post: ERISA Preemption of State Insurance Mandates.

Employers desiring to waive COVID-19 cost-sharing in a similar manner with self-insured health plans should consult with their TPA and stop-loss provider to determine whether such measures are an option for the plan.

What About High Deductible Health Plans and HSA Eligibility?

The general rule is that an individual must meet two primary requirements to be HSA-eligible (i.e., to be eligible to make or receive HSA contributions):

1) Be covered by an HDHP; and
2) Have no disqualifying coverage (generally any medical coverage that pays pre-deductible).

An HDHP cannot cover any non-preventive expenses before the minimum statutory deductible ($1,400 individual, $2,800 family) is satisfied.

At this point, it is not clear how these state directives will affect HSA eligibility.  It seems likely that the IRS will eventually release guidance confirming that COVID-19 testing can qualify for first-dollar coverage as an HDHP preventive service.  The IRS already issued guidance in 2019 expanding the list of preventive services available to HDHPs.

For more information on HSA eligibility issues, see our: ABD 2020 Go All the Way With HSA Guide.

Where Can I Find More Information About Employer COVID-19 Policies Generally?

We’re actively monitoring the coronavirus outbreak and reaching out with our update on the situation to provide insight and resources as it pertains to your employees and how your insurance policies may respond to losses related to COVID-19.  We sympathize with everyone who has been impacted by the virus.

The Centers for Disease Control and Prevention (CDC) is working closely with the Department of Health and Human Services (HHS) regarding public communication and guidance. We encourage you to stay informed as this situation continues to develop. ABD will continue to provide information as we receive new details that can support your benefit and insurance needs.

Visit ABD Insight links below:

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship.  Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).

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