COVID-19: Health and Welfare Benefits and Relief Included in the CARES Act - McDermott Will & Emery

COVID-19: Health and Welfare Benefits and Relief Included in the CARES Act



In the ongoing effort to help individuals impacted by COVID-19, Congress passed the Coronavirus Aid, Relief, and Economic Securities Act (the “CARES Act” or “Act”) on March 27, 2020. The President signed the Act into law the same day. The historic stimulus package provides wide-ranging relief for both employers and employees. This includes rules that impact health and welfare, retirement and executive compensation plans and programs.

In Depth

For health and welfare plan sponsors, the CARES Act relief includes, among other things, increased access to COVID-19 diagnostic testing and telehealth services, as well as additional reimbursement opportunities for individuals and guidance for plan sponsors. For details about the key retirement plan provisions of the CARES Act, please see our On the Subject here.

A summary of the health and welfare-related provisions of the CARES Act is included below.


1. What types of COVID-19 testing must employers provide?

As part of the Families First Coronavirus Response Act, Congress required employer-sponsored group health plans to provide COVID-19 diagnostic testing that has been approved by the Food and Drug Administration (“FDA”) and related services on a first-dollar basis with no cost-sharing for participants (see our recent On The Subject here).

The CARES Act expands the types of COVID-19 diagnostic testing an employer must cover on a first-dollar basis with no cost-sharing to participants to include certain tests that are: (1) subject to or intend to be submitted for an emergency use authorization with the FDA, (2) developed and authorized by a state government, or (3) directed to be covered by the Secretary of Health and Human Services.

2. What rates govern plan sponsor reimbursement to healthcare providers for COVID-19 testing?

For in-network providers, the CARES Act clarifies that if a plan has a negotiated rate with a given provider already in place, that is the amount the plan will pay for COVID-19 testing coverage. If there is no negotiated rate, such as for out-of-network providers, reimbursement is at the “cash price,” unless the plan negotiates a lower rate with the provider. The CARES Act requires providers to post the cash price of tests on their public website and authorizes the Secretary of Health and Human Services to impose a monetary penalty of up to $300 per day on any provider who fails to do so. While unclear, these rules presumably apply to the other items and services that relate to the provision of the diagnostic test or the evaluation of an individual to determine whether a test is necessary—however, more guidance would be appreciated.

3. What types of COVID-19 coverage are employers required to provide?

Group health plans and health insurance issuers offering group or individual health insurance are required to cover, without cost-sharing, any “qualifying coronavirus preventive service.” The CARES Act defines a “qualifying coronavirus preventive service” as an item, service or immunization that is intended to prevent or mitigate COVID-19 and that meets one of the following requirements:

  • an evidence-based item or service that has in effect a rating of “A” or “B” in the current recommendations of the United States Preventive Services Task Force, or
  • an immunization that has in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved.

4. When must employers begin to cover qualifying coronavirus preventive services?

Coverage for qualifying coronavirus preventive services is required within 15 business days after the date on which a recommendation is made by the applicable government agency relating to such services. This is a quicker timeframe than is currently required under law and would presumably speed up the time in which any COVID-19 vaccine could be made available to individuals.

5. Can employers offer below-market or free telemedicine to provide care during the COVID-19 pandemic for those covered under a high-deductible health plan?

Yes, including care unrelated to COVID-19. For plan years beginning on or before December 31, 2021, the CARES Act permits a high-deductible health plan (“HDHP”) to provide for first-dollar coverage of telehealth and other remote care services without jeopardizing an individual’s eligibility to contribute to a health savings account (“HSA”). As a result, medical care can temporarily be provided through telemedicine for COVID-19 and other conditions without disqualifying an individual from contributing to a health savings account. This expands and solidifies previous IRS guidance allowing first-dollar coverage of telehealth services directly related to testing and treatment of COVID-19 (see our recent On the Subject here).

6. Is it true that the CARES Act permits reimbursement from a health FSA, HRA or HSA of menstrual care products and over-the-counter drugs without a prescription?

Yes. The CARES Act allows reimbursement for over-the-counter (“OTC”) drugs without a prescription from account-based plans, such as health flexible spending accounts (“FSAs”), health reimbursement arrangements (“HRAs”) and health savings accounts (“HSAs”). The CARES Act also permits reimbursement for menstrual care products. Previously, the Affordable Care Act prohibited reimbursement for OTC medicines purchased without a prescription.

7. Are there any special considerations for plan sponsors regarding obligations under the Health Insurance Portability and Accountability Act (“HIPAA”)?

The CARES Act clarifies responsibilities of plan sponsors to safeguard protected health information (“PHI”) of individuals undergoing treatment for substance use disorders. Under the CARES Act, such an individual’s prior written consent must be obtained before PHI is shared with other entities, including HIPAA business associates. An individual undergoing treatment for substance use disorders may provide a single prior written consent for all future disclosures, so long as such consent is not revoked.

The CARES Act also requires the Secretary of Health and Human Services to issue guidance within 180 days following enactment of the CARES Act on sharing PHI during the COVID-19 public health emergency. This guidance will help plan sponsors to comply with HIPAA while dealing with challenging situations related to quarantines, notification of potential exposure to other employees and telework and other employee leave requirements.

Many of the changes required or permitted by the CARES Act will require amendments to plan documents and updates to summary plan descriptions. Plan sponsors should work with third-party administrators, insurers and legal counsel to ensure these changes are implemented correctly and to consider any other legal requirements that might be implicated.

If you have any questions regarding the above, please reach out to your regular McDermott lawyer or one of the listed authors.