How the CARES Act affects employer-sponsored benefits
By now, most employers have presumably read up on the basic tax relief and financial assistance aspects of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. What you may not have heard much about is how the law affects employer-sponsored benefit plans. Here are some highlights of its impact:
Coverage mandates. Under the Families First Coronavirus Response Act, an earlier law passed in response to the outbreak, health insurers and group health plans were required to cover coronavirus (COVID-19) testing and related provider visits without cost-sharing. The CARES Act has extended this requirement 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 they 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. This requirement will apply 15 business days after the task force’s recommendation.
Telehealth exemption for high-deductible health plans (HDHPs). A safe harbor allows 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 law’s enactment.
Over-the-counter (OTC) drugs and certain other products. The CARES Act removes the prescription requirement for OTC drug reimbursements that previously applied to:
- Health Flexible Spending Arrangements,
- Health Reimbursement Arrangements,
- Health Savings Accounts (HSAs), and
- Other accident and health plans.
In addition, menstrual care products now qualify as medical care for purposes of reimbursement or tax-free distribution. These changes generally apply to expenses incurred after December 31, 2019; however, in the case of HSAs, they apply to amounts paid after that date. (As of this writing, there’s no expiration date.)
HIPAA privacy. The CARES Act aligns the Federal Confidentiality of Alcohol and Drug Abuse Patient Records Act with privacy rules under the Health Insurance Portability and Accountability Act (HIPAA). That is, the law generally allows 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. The U.S. Department of Health and Human Services (HHS) has been instructed to update its regulations and issue guidance regarding this change.
ERISA deadlines. The law adds public health emergencies declared by HHS to the list of events permitting the U.S. Department of Labor to delay, for up to one year, deadlines under the Employee Retirement Income Security Act (ERISA). Examples include deadlines for filing claims or appeals under a plan’s internal claims procedures.
Employers may need to immediately adjust their benefits administration systems to the many changes occurring because of the COVID-19 emergency. Contact Darnall, Sikes, & Frederick for help understanding how the CARES Act, or any other actions in response to the pandemic, may affect your organization.