Another Round of COVID-19 Legislation Impacts Employer-Sponsored Benefit Plans

Congress has passed, and the President has signed, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) intended to ease the economic impacts stemming from the novel coronavirus disease (COVID-19) outbreak by providing emergency economic relief to families and small businesses. Coming on the heels of the Families First Coronavirus Response Act (FFCRA) (see our article), this legislation includes additional impacts for employer-sponsored benefit plans. Here are highlights:

• Coverage Mandates. The FFCRA requirement for health insurers and group health plans to cover COVID-19 testing (and related provider visits) without cost-sharing is extended to additional categories of COVID-19 tests, even if not FDA-approved. Health plans and insurers must reimburse the diagnostic testing provider according to any negotiated rate with the provider, or must pay the provider’s publicized cash price for the diagnostic test in the absence of a negotiated rate. Health insurers and group health plans will have to cover, without cost-sharing, COVID-19 preventive services and immunizations that receive specified recommendations from the CDC’s United States Preventive Services Task Force (USPSTF). This requirement will apply 15 business days after the USPSTF’s recommendation. [EBIA Comment: Ordinarily, when there is an update to a USPSTF recommendation, coverage generally would only be provided for plan years beginning on or after one year after the date the recommendation is issued.]
• Telehealth Exemption for HDHPs. A safe harbor allows high-deductible health plans (HDHPs) to cover telehealth and other remote care services without a deductible for plan years beginning on or before December 31, 2021. This provision is effective March 27, 2020 (the date of the legislation’s enactment).
• OTC Drugs and Menstrual Care Products. The legislation removes the prescription requirement for over-the-counter (OTC) drug reimbursements that previously applied to health FSAs, HRAs, and other accident and health plans, as well as to HSAs. In addition, menstrual care products will now qualify as medical care for purposes of reimbursement or tax-free distribution. These changes generally apply to expenses incurred after December 31, 2019; in the case of HSAs, they apply to amounts paid after that date. [EBIA Comment: Note that these changes do not have an expiration date.]
• Student Loan Repayments. The legislation amends the definition of educational assistance under Code § 127 to include repayment of a qualified education loan (generally, a loan for higher education expenses) incurred by the employee for the employee’s own education, provided the employer’s payment is made after March 27, 2020, and before January 1, 2021. Payment may be made to the lender or directly to the employee, and is excludable from the employee’s gross income to the extent the payment does not cause the employee’s total benefit for the year under the employer’s educational assistance program to exceed the Code § 127 annual maximum of $5,250.
• HIPAA Privacy. The legislation aligns the Federal Confidentiality of Alcohol and Drug Abuse Patient Records Act with the HIPAA privacy rules, generally allowing disclosure and redisclosure of covered records for treatment, payment, or health care operations to the extent permitted by HIPAA after a patient provides initial written consent. HHS is instructed to update its regulations on Notices of Privacy Practices to reflect this change. HHS is instructed to issue HIPAA guidance on the sharing of protected health information during the COVID-19 emergency.
• ERISA Deadlines. The legislation also adds public health emergencies declared by HHS to the list of events permitting the DOL to delay ERISA deadlines by up to one year. [EBIA Comment: Delays are also permitted in the event of presidentially declared disasters and terroristic or military actions. Deadlines that may be delayed include, for example, deadlines for filing claims or appeals under a plan’s internal claims procedures.]

EBIA Comment: The COVID-19 emergency has advanced some law changes that were being advocated long before anyone was aware of the new coronavirus. The apparently permanent removal of the prescription requirement for OTC drug reimbursements is significant, and will no doubt be welcomed by participants and other stakeholders. Quick action may be needed to adjust administrative systems. Previous guidance permitted HDHPs to cover COVID-19 related testing and treatment with no or low deductible (see our Checkpoint article). This additional modification of the HDHP rules—while temporary—may encourage the use of remote health services. The legislation also contains provisions affecting retirement plans, addressed in our separate Checkpoint article. For more information, see EBIA’s Health Care Reform manual at Section XII.C.3 (“United States Preventive Services Task Force (USPSTF) Recommendations”), and EBIA’s Group Health Plan Mandates manual at Section XIV.C.2 (“United States Preventive Services Task Force (USPSTF) Recommendations”). See also EBIA’s Consumer-Driven Health Care manual at Sections X (“HSAs: Required HDHP Coverage”), XI (“HSAs: Other Permissible/Impermissible Types of Coverage”), XV.B (“HSA Distributions Are Tax-Free If for Qualified Medical Expenses”), and XXIV.B.1 (“Out-of-Pocket Medical Expenses May Be Reimbursed by an HRA”); EBIA’s Cafeteria Plans manual at Section XX.L.2 (“Medicines and Drugs (Over-the-Counter and Prescription)”); EBIA’s Fringe Benefits manual at Section X (“Qualified Educational Assistance Programs”); EBIA’s HIPAA Portability, Privacy & Security manual at Section XXXIV.E (“Federal Substance Abuse Rules”); and EBIA’s Self-Insured Health Plans manual at Sections XI.E.5 (“Telemedicine”) and XIII.C (“Federally Mandated Benefits”).

Contributing Editors: EBIA Staff.