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Coronavirus and Health Insurance Coverage – All the Details You Wish You Didn’t Need

March 12, 2020

This blog entry about coronavirus and health insurance coverage was posted at 2:10 pm Eastern Time on Thursday, March 12, 2020.  By the time you read it, details may have changed.

We don’t know about you, but between the two of us, we’ve canceled one vacation, screamed at the television multiple times when Vice Presidents past and present mangled the definition of an essential health benefit, and are almost out of hand sanitizer. So, while it is top-of-mind, we would discuss the facts concerning COVID-19 (or coronavirus) and health insurance coverage.

Lots of people in the public eye are saying that health insurance covers coronavirus and that Americans are eligible for cost-sharing relief. In many cases, these are true statements. COVID-19 is both famous and alarming, but bottom-line it’s still a virus. Screening and treatment of viral infections of all types are generally covered by health insurance, particularly for people with comprehensive major medical coverage.

Many health insurance carriers are voluntarily giving customers more affordable access to diagnostic testing by waiving any related co-payments. America’s Health Insurance Plans is keeping an up-to-date list of what different private health insurance carriers report they are doing for plan participants. Some insurers are providing even more expansive cost-sharing relief and easing plan design features that could impede people from seeking care quickly or hinder people who are facing quarantine. Examples include lifting preauthorization requirements, prescription drug refill limits, and waiving copayments on telemedicine visits. Many claims administrators are also automatically implementing similar benefit design changes for self-funded plans that don’t elect to opt-out

That being said, details matter, during a pandemic and otherwise. There are nuances to every health coverage situation based on funding sources, structure, size, location, and more. We’ve attempted to break it all down based on the type of coverage and the CURRENT status of federal and state legislation and regulation.

Coronavirus and Public Program Coverage (Medicare, Medicaid, CHIP, VA Healthcare, Etc.)

Federal officials have made it clear that all of the primary sources of public program coverage include coronavirus testing and treatment. How it works and what participants may need to pay for care varies by program. For Medicare beneficiaries, Part B will cover COVID-19 tests with no associated out-of-pocket costs. Part A covers people hospitalized for treatment, but as of now, regular cost-sharing applies. Medicare Advantage beneficiaries have access to this same coverage, and the individual carriers can opt to waive co-pays for laboratory testing.  Original Medicare and Medicare Advantage plans also offer telemedicine options, and depending on the type of visit, cost-sharing varies. In every state, Medicaid and Children’s Health Insurance Program benefits and cost-sharing requirements differ, and individual states will decide, what, if any costs, program participants will pay for services related to coronavirus. The type of coverage available through Tricare and the Veterans Administration is unique to each eligible participant, but depending on the kind of coverage participants have, testing and treatment will be covered benefits and telemedicine is another potential option.

COVID-19 and Individual and Groups with Fully-Insured Major Medical Coverage

Approximately 14 million people have individual private coverage offered by a fully-insured health insurance plan. The Census Bureau indicates that about 159 million have employer-sponsored coverage, and roughly 95 million of them have it through fully-insured group plans.  All of these people will have access to any specific COVID-19 benefits offered by their health insurance carrier.

Coronavirus testing and treatment both generally fall under the scope of the essential health benefit requirements established by the Affordable Care Act (ACA). All non-grandfathered individual and small group fully-insured health plans must include essential health benefits coverage, so those people should have access to care. Large fully-insured group plans do not have cover all categories of essential health benefits. Still, most do cover laboratory testing and ambulatory and hospitalization services, so people in these plans would have access to whatever benefits are part of their existing policy.

The individual states also regulate fully-insured health insurance carriers directly. Many states have issued guidance regarding health insurance coverage and related cost-sharing specific to their jurisdictions. The extent of each state’s action is fluid, and it may depend on what emergency authority policymakers have available.  The National Association of Insurance Commissioners is maintaining a coronavirus resource center to track state-level regulatory action, among other things.

Coronavirus and Self-Funded Health Plans

Approximately 40 percent of people with employer-sponsored coverage (about 70 million people) are offered coverage through a self-funded group health plan.  While most of these people have an insurance card with a “brand name” carrier on it, that carrier is just the claims administrator. The big-name insurer may be offering to help their administrative services clients with cost-sharing waivers and plan design adjustments relative to COVID-19 claims. Still, ultimately it is up to each employer plan sponsor to decide what kind of benefits it will offer to plan participants.

The states do not regulate self-funded group plans, so state-level requirements regarding coverage costs and terms do not apply to people with this type of coverage.  These plans also are not required to cover essential health benefit categories like laboratory testing or ambulatory care and inpatient care.  That means no one with self-funded group coverage is guaranteed to have coverage for all types of COVID-19 care.  However, most self-funded group plans do include at least some benefits for the types of services people exposed to coronavirus might need, and people in these plans would have access to whatever their policy covers.  The bottom line is people with self-funded group coverage need to check with their plan administrator about how coronavirus tests and any related care and treatment will be covered and at what price.

Qualified High-Deductible Health Plans and Health Savings Accounts

As we’ve explained previously, according to the 2003 federal law that created them, to pair with a health savings account (HSA) legally, high deductible health plans (HDHPs) must subject all benefits to a minimum deductible, except for preventive care. The Department of Treasury has the authority to determine what qualifies as preventive care, just for HDHPs and HSAs.  On March 11, 2020, the Internal Revenue Service (IRS) issued Notice 2020-15, which allows HDHPs to cover coronavirus-related diagnostic and care expenses without application of a deductible.  The HDHP can also apply a lower deductible, and neither action will affect health savings account deposit rules.

This new guidance is welcome and exciting, but there are few important nuances to keep in mind. First of all, it doesn’t require HDHPs to waive deductibles for COVID-19 expenses; it just allows them to do so.  So, for people with fully insured HDHPs, adjustments are at their carrier’s discretion. For people with HDHPs offered through a self-funded group plan, it is ultimately up to the employer group plan administrator. The IRS guidance also does not directly extend to telemedicine benefits. People with HDHP coverage and telemedicine benefits still need to pay a fair market price for each virtual appointment until they satisfy their deductible.

Short-Term Limited Duration Coverage

Several million people have short-term limited duration health insurance (STLDI) coverage.  The ACA does not apply to this coverage, and it often contains minimal benefits, particularly for hospitalization. Furthermore, these policies typically are medically underwritten and contain strict preexisting condition clauses. As Axios reported, a person with STLDI recently had a costly and shocking experience when he sought coronavirus testing through a local emergency room. People with this type of coverage need to review their specific policy terms and also check in with their health insurance carrier to see how they are handling COVID-19 related claims.

Isn’t There A Better Way?

Finally, people keep asking us, isn’t there a more straightforward way to make sure all Americans exposed to coronavirus have access to affordable testing, care, and treatment?  Beyond that, how can we protect people who might need treatment for unrelated medical conditions while quarantined or in the face of a potential prescription drug or direct care shortages?  While we wish we could give an unequivocal “yes” to those questions, the best we can do is a lukewarm “sort of.”

Congress could introduce and pass, and then the President could sign, emergency legislation to require specific and consistent coverage terms for all health insurance programs public and private, related to COVID-19. Federal legislation could also provide comprehensive relief relative to paid leave and the prescription drug supply chain.

Another alternative would be for the U.S. Preventive Services Task Force to declare coronavirus testing, telemedicine, and possibly other related services as “preventive care.” Then the Department of Health and Human Services could require all non-grandfathered health insurance plans (including fully-insured and self-funded coverage) to cover it without applying cost-sharing. That action wouldn’t reach every American, but it would be a good clean start.

So far, no federal action to this effect has happened yet, but we are crossing our fingers (when not obsessively washing our hands!)

We are also continuing to monitor developments in this area.  And have many more thoughts.  Keep an eye out for future blog posts addressing the “brave new world” we are all facing.  Have specific questions?  Feel free to comment below and we’ll try to address as much as we can as things continue to unfold.