March 16, 2020
COVID-19: Employer Group Health Plan Changes to Help Employees
and Stop the Spread of the Virus
By Nancy K. Campbell
In the early hours of Saturday morning, the House of Representatives, in a 363-40 vote, passed HB 6201 entitled the “Families First Coronavirus Response Act” (“FFCRA”). On Friday, before the vote, President Trump tweeted his support for FFCRA, giving Republicans permission to vote in favor of the bill. But, Senate Majority Leader Mitch McConnell sent the Senate home for the weekend.
Employer Next Steps
While we wait for the Senate to vote on the bill, employers can start to think about design changes they might make to their group health plans to lessen the financial impact of COVID-19 on their employees and help stop the spread of the virus. With well over 50% of Americans covered by employer group health plans, the changes employers make to their plans could have a significant impact on the spread of the disease.
Unfortunately, we are at the beginning of the calendar year, when most plan participants have not met their deductible. This could cause employees to delay getting the testing and treatment they need to prevent COVID-19 from spreading within an employer’s workforce. With COVID-19 appearing to be significantly more contagious, and deadly, than the seasonal flu, it is important for employers to address these issues sooner rather than later.
Although employers will have to make changes required by federal law and applicable state laws, some employers may decide to go above and beyond legal mandates and voluntarily make additional changes to help employees deal with the pandemic.
Federal Legislation – Required Changes
If the Senate passes FFCRA in its current form, it will provide free COVID-19 testing for anyone who needs it, regardless of whether or not the person is insured. It will implement this through various mechanisms, one of which requires employer group health plans and health insurance issuers (including grandfathered health plans) to cover the following without any cost-sharing (including deductibles, copayments and coinsurance), prior authorization or other medical management requirements:
(1) COVID-19 diagnostic products (that are approved, cleared or authorized by the FDA) and the administrations of such products; and
(2) Items and services furnished to an individual during health care provider office visits, urgent care center visits and emergency room visits that result in an order for or administration of an in vitro diagnostic product described in paragraph (1), but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.
For the remainder of this article, the term “COVID-19 Testing Care” refers to the products and services described in paragraphs (1) and (2) above.
For employees who are not enrolled in an employer’s group health plan, most will have access to COVID-19 Testing Care through a spouse’s group health plan, a parent’s group health plan until age 26, an individual health insurance policy, Medicare, Medicaid or CHIP. FFCRA mandates that all of these health insurance options provide COVID-19 Testing Care free of charge.
For uninsured employees, the National Disaster Medical System will provide free COVID-19 testing through laboratory reimbursements, but it does not appear to cover related health care provider visits.
These special rules for COVID-19 Testing Care apply during any portion of the emergency period, beginning on or after the date of enactment.
What Medical Care Does FFCRA Require Be Covered Free of Charge?
Not as much is covered free of charge as the average plan participant might think. The free COVID-19 Testing Care rules only apply if the visit results “in an order for or administration of” COVID-19 testing and “only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.”
As an example, if a participant goes to an emergency room thinking she has COVID-19, but ends up being diagnosed with the flu, the emergency room visit will not be free if no COVID-19 test is ordered or administered. Given the lack of COVID-19 tests currently available in the United States, this is a real problem because health care providers cannot perform tests they do not have. Also, they may be disinclined to order tests they know are not available.
The FFCRA free COVID-19 Testing Care rules only apply to the portion of the visit related to COVID-19 testing, but not to other medical care received during the visit or a subsequent hospital stay or other follow-up care for COVID-19. This point may be lost on participants who end up with large medical bills for seeking treatment they assumed would be free.
Another issue plan participants face when determining what FFCRA requires plans to cover free of charge is whether the free COVID-19 Testing Care rules apply to both in-network and out-of-network care. It appears that they apply whether the care is received in-network or out-of-network, but clarification would be beneficial.
These issues pose challenges for employers when drafting employee communications. Employers want to ensure that employees seek the care they need by giving them a clear understanding of the care to which they are entitled free of charge under FFCRA while, at the same time, helping them to understand that not all COVID-19 medical care is free.
For self-funded plans, most state legislation requiring employer group health plans to cover COVID-19 testing or treatment would be preempted by ERISA. However, insured group health plans may have to comply with state law changes. Accordingly, self-funded group health plans will likely have more flexibility in designing their group health plans to address COVID-19 testing and treatment.
A state-by-state review of the COVID-19 laws that might impact insured group health plans is beyond the scope of this article. Employers with insured plans should check with their insurance issuers as soon as possible to determine what changes, if any, are being made to their plans in addition to those required by FFCRA.
Many third-party administrators (“TPAs”) for self-funded health plans are implementing the same state law changes for self-funded plans as they are implementing for their insured plans. However, most TPAs are allowing self-funded plans to opt-out of state law changes and/or make certain voluntary changes. Some TPAs may not be able to administer all changes an employer wants to make. Accordingly, self-funded plan sponsors should get with their TPAs as soon as possible to determine what changes they are able to make.
Voluntary Health Plan Changes
In addition to the changes required by FFCRA or state law, employers may want to consider applying some of the following changes:
- Shortening waiting periods for employees who are not yet covered;
- Waiving deductibles, copayments and coinsurance for COVID-19 testing and treatment beyond what is required by FFCRA;
- Waiving medical necessity requirements for COVID-19 testing;
- Waiving experimental or investigational exclusions for COVID-19 testing and/or treatment;
- Treating out-of-network COVID-19 treatment the same as in-network care when a participant is funneled to an out-of-network hospital designated as a preferred location;
- For telemedicine visits, waiving deductibles, copayments and coinsurance to encourage participants with more routine health issues (e.g., bladder infections, ear aches, allergies) to avoid physically going to the doctor and becoming infected with COVID-19, keeping in mind the high deductible health plan (“HDHP”) issues noted below;
- Allowing early Rx refills so participants can stock up in advance of quarantine; and
- Making additional employer contributions to health savings accounts (“HSAs”) to help HDHP participants offset unforeseen medical expenses, keeping in mind HSA annual limits and nondiscrimination rules.
Although a COVID-19 vaccine is not yet available, once it is, it will likely be covered as free preventive care under most employer group health plans, the same as flu shots.
High Deductible Health Plan (“HDHP”) Issues
Many employers offer HDHPs, so participants can make and receive tax-free contributions to HSAs. One HDHP requirement is that the deductible must be at least $1,400 for self-only coverage and $2,800 for family coverage for 2020.
Under long-standing Internal Revenue Service (“IRS”) guidance, only preventive care can be offered free of charge to participants in an HDHP prior to satisfying the applicable deductible. If an HDHP provides non-preventive care free of charge before the minimum deducible is satisfied, the plan will fail to be an HDHP under Internal Revenue Code Section 223, disqualifying individuals covered by the plan from being eligible to make or receive tax-favored HSA contributions.
Thankfully the IRS issued Notice 2020-15 last week making an exception for COVID-19 testing and treatment. The Notice provides that until further guidance is issued, a health plan that otherwise meets the requirements of an HDHP:
will not fail to be an HDHP under section 223(c)(2)(A) merely because the health plan provides health benefits associated with testing and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. Therefore, an individual covered by the HDHP will not be disqualified from being an eligible individual under section 223(c)(1) who may make tax-favored contributions to a health savings account (HSA).
Although Notice 2020-15 permits employer group health plans to waive the deductible for COVID-19 testing and treatment beyond what is required by FFCRA, it does not require that these plans do so. However, for plans that decide to waive the HDHP deductible for COVID-19 testing and treatment beyond just COVID-19 Testing Care, the Notice is welcome relief.
On a related note, Notice 2020-15 as issued last week, does not provide any relief for waiving HDHP deductibles for telemedicine visits that are not for COVID-19 testing or treatment. It remains to be seen whether the IRS will make an exception for telemedicine for more routine issues during the period of the pandemic; as of the date of this article they have not. Accordingly, employers must be careful when waiving deductibles for HDHP telemedicine visits, other than those for COVID-19 testing or treatment. Without an IRS exception, doing so could cause the plan to fail to be an HDHP and render all participants ineligible to make or receive HSA contributions for the calendar year.
Plan Amendments and Employee Communications
Employers that make changes to their group health plans, whether required by law or voluntary, must remember to adopt appropriate plan amendments and provide participants with a summary of material modifications (“SMM”) explaining changes. It is important to provide SMMs as soon as possible so participants know what COVID-19 testing and treatment is free and what is not.
Other Group Health Plan Issues
- HIPAA Privacy: As a reminder, employers cannot use information taken from a group health plan and use it for employment purposes. For example, an employer cannot go into its group health plan to confirm that an employee has taken a COVID-19 test that is required to return to work. Doing so violates HIPAA privacy rules as an impermissible use of protected heath information and could subject the employer to significant penalties.
- Stop-Loss Insurance: Employers with self-funded plans should review their stop-loss policies to determine whether coverage limits are appropriate in the event claims spike due to COVID-19. They should also consider whether any force majeure clauses might be triggered.
- Other Laws Still Apply: In making group health plan changes, employers must remember that other laws continue to apply. As an example, if an employer decides to waive deductibles, copayments and/or coinsurance for telemedicine visits for medical care, it must do the same for behavioral health care. Doing so for medical care and not for behavioral health care would violate the Mental Health Parity Act.
- Family and Medical Leave Act: FFCRA makes dramatic changes to the Family and Medical Leave Act. Please see COVID-19: Dramatic Proposed Changes to the FMLA for an explanation of those changes. As of the date of this article, we are sorting through the impact the FMLA changes might have on employer group health plans.
There is much to think about as employers scramble to make appropriate changes to their group health plans to deal with COVID-19. Employers that make thoughtful changes might help stop the spread of COVID-19 within the workplace and society at large. However, careful consideration must be given to avoid violating other applicable laws or triggering negative tax consequences for HDHP participants.