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The CARES Act Impacts to Employer-Sponsored Health and Welfare Benefit Plans

By Beth Alcalde & Amber Roberts on March 30, 2020
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Health and welfare benefit plans and insurers are affected by various provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed on March 27, 2020. In addition to provisions impacting tax-qualified retirement plans and executive compensation (summarized here), the CARES Act affects coverage of diagnostic testing, preventive services, telehealth services, and drug reimbursement. Here are the highlights:

Section 3201 – Coverage of Diagnostic Testing for COVID-19

FFCRA Baseline. First we should recall what the Families First Coronavirus Response Act (FFCRA), enacted March 18, 2020, already addressed. The FFCRA had already required that group health plans and health insurers offering group and individual health insurance coverage (including grandfathered health plans), provide coverage for items related to COVID-19 testing. This “testing” concept was extended to FDA-approved diagnostic products, items, and services furnished during a provider visit (whether in person or in a telehealth setting), an emergency room visit, or an urgent care visit that results in a diagnostic test.

No Cost Sharing. The FFCRA prohibited group health plans and insurers from imposing any cost sharing requirements (including deductibles, copayments, and coinsurance), prior authorizations, or other medical management requirements for the aforementioned testing products and services.

Expansion by CARES Act. The CARES Act expands upon the types of testing covered with no cost sharing as provided under the FFCRA. In addition to FDA-approved diagnostic testing, coverage is now extended to diagnostic tests where a developer “has requested, or intends to request” FDA emergency use authorization and to diagnostic tests authorized by an individual State (provided that the State has notified HHS).

Tests Not Yet Developed. Scientists around the world are racing to develop new testing and treatment protocols in response to COVID-19. And so the CARES Act leaves the door open for coverage of “other tests that the Secretary determines appropriate in guidance.”

Section 3202 – Pricing of Diagnostic Testing

Amount of Reimbursement. Pricing mandates also accompany the CARES Act’s broader COVID-19 testing coverage requirement. The CARES Act requires that group health plans and insurers providing the mandated COVID-19 testing coverage must reimburse the providers of such testing at the same rates negotiated prior to the declaration of the coronavirus public health emergency. If no such rates were negotiated, reimbursements must be paid at an amount equal to (or less than) the cash price for the testing services as listed on the provider’s website.

Pricing Transparency. The CARES Act mandates that all providers of COVID-19 diagnostic tests publish the price of the testing services online. Providers who fail to comply with the publishing requirement are subject to a fine of up to $300 per day.

Section 3203 – Rapid Coverage of Preventive Services and Vaccines for Coronavirus

Preventive Service Definition. The CARES Act requires group health plans and health insurers to cover any “qualifying coronavirus preventive service” without any cost sharing requirements. A qualifying preventive service is defined as an “item, service, or immunization that is intended to prevent or mitigate coronavirus disease 2019,” that has received either an “A” or “B” in the recommendation of the United States Preventive Services Task Force or a recommendation by the CDC. This coverage requirement is effective “15 business days after the date on which a recommendation is made relating to the qualifying coronavirus preventive service.”

Section 3701 – Exemption for Telehealth Services

Impact to High Deductible Health Plans and HSAs. As noted in our March 13, 2020 Blog Post, the IRS issued Notice 2020-15, confirming that a health plan will not fail to satisfy the high deductible health plan (HDHP) requirements, and a participant will not be disqualified from contributing to a health savings account (HSA), simply because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum statutory deductible required for an HDHP.

Limited Duration Safe Harbor. On a related note, the CARES Act creates a safe harbor for HDHPs that do not charge deductibles for telehealth. For plan years beginning on or before December 31, 2021, a plan will not fail to be a high deductible health plan (and a participant will not be disqualified from contributing to an HSA) by reason of failing to charge a deductible for “telehealth and other remote care services.”

Section 3702 – Inclusion of Certain Over-the-Counter Medical Productions as Qualified Medical Expenses

OTC Drug Reimbursement Expansion. Since the 2010 enactment of the Affordable Care Act, individuals have been prohibited from using HSAs, flexible spending accounts, health reimbursement accounts, and Archer medical savings accounts to purchase most over-the-counter medicines. Under the CARES act, over-the-counter medications and menstrual products are deemed “qualified medical expenses.” As such, individuals may use pre-tax dollars in the aforementioned accounts to purchase over-the-counter medicines and menstrual products. This provision applies to expenses incurred after December 31, 2019.

Photo of Beth Alcalde Beth Alcalde

A noted employee benefits lawyer, author, and speaker, Beth Alcalde represents Fortune 500 companies and other public and private entities, including those in the hospitality, healthcare, and higher education sectors, throughout the United States. As a leader within the firm, Beth is a…

A noted employee benefits lawyer, author, and speaker, Beth Alcalde represents Fortune 500 companies and other public and private entities, including those in the hospitality, healthcare, and higher education sectors, throughout the United States. As a leader within the firm, Beth is a longtime member of Akerman’s Board of Directors, and is also a current member of Akerman’s Executive Committee. Previously she chaired the firm’s Professional Development Committee, and served as office managing partner of the firm’s Palm Beach County offices. Noted in Chambers USA as “terrific at coming up with imaginative solutions,” Beth provides counsel on employer-sponsored benefit plans, from compliance with ERISA, the Affordable Care Act, and other federal regulations, to internal audits and benefits-related implications of corporate transactions. She assists clients in defending and responding to audits conducted by the Internal Revenue Service (IRS), U.S. Department of Labor (DOL), and U.S. Department of Health and Human Services (HHS). Of particular emphasis, Beth has represented group health plan sponsors in responding to audits of the quantitative and non-quantitative treatment limitations within their plans, as required by the Mental Health Parity and Addiction Equity Act.

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Photo of Amber Roberts Amber Roberts

Amber Roberts focuses her practice on the design and implementation of qualified and non-qualified retirement and deferred compensation plans, welfare plans, cafeteria plans, and other employee benefit programs for both public and private companies. She assists clients on executive compensation and benefits issues

…

Amber Roberts focuses her practice on the design and implementation of qualified and non-qualified retirement and deferred compensation plans, welfare plans, cafeteria plans, and other employee benefit programs for both public and private companies. She assists clients on executive compensation and benefits issues arising in the context of mergers, acquisitions, and other corporate matters. Amber also helps clients maintain compliance with the federal laws and regulations associated with these plans, including ERISA, the Internal Revenue Code, COBRA, HIPAA, nonqualified deferred compensation plans, performance-based compensation, fringe benefits, privacy matters, and state regulatory guidance and withdrawal liability for multiemployer plans.

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  • Posted in:
    Employment & Labor, Health Care and Life Sciences
  • Blog:
    Health Law Rx
  • Organization:
    Akerman LLP
  • Article: View Original Source

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