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CARES Act Relief: Health and Welfare Plan Provisions

Mar 28, 2020 Decorative image

Seyfarth Synopsis: On March 27, 2020, the House of Representatives followed the Senate’s lead in voting overwhelmingly to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The President signed the legislation into law shortly thereafter. This blog post highlights the health and welfare benefit provisions contained in the law. Click here to review the executive compensation provision contained in the law, and click here and here to review the retirement plan provisions.

No Cost Coverage for COVID-19 Screenings and Vaccines

Screenings and Related Costs at No Charge to Participants

The CARES Act amended (and expanded) the screening mandate under the Families First Coronavirus Response Act (FFCRA). As a refresher, the FFCRA requires insured and self-funded group health plans to provide coverage for COVID-19 screenings, as well as any items and services furnished during the office visit (including telehealth visit), urgent care center visit, and emergency room visit that results in an order for or administration of a COVID-19 screening. Plans may not impose any cost-sharing (deductibles, copays, coinsurance, etc.) for such screening or associated visit.

The CARES Act amends the FFCRA to clarify that plans must also cover such services in the non-network setting at the rate of reimbursement publicized by the provider on its website (the Act requires providers to do so), or a lower rate negotiated with the provider. Presumably, the intent of this provision is to ensure the plan pays a sufficient rate for non-network coverage to avoid participant balance billing, while limiting the plan’s upside liability through the internet price publishing obligation.

To be clear, neither the FFCRA nor the CARES Act mandate that plans cover (with or without cost-sharing) coronavirus-related services following a COVID-19 diagnosis.

Vaccine at No Charge to Participants

The CARES Act further sets the stage to require plans to cover COVID-19 vaccinations at no cost (once available). As most are aware, the ACA requires that preventive services must be provided at no cost. For these purposes, preventive services include recommendations by the US Preventive Services Task Force no earlier than the first plan year beginning one year after the recommendation is added. The CARES Act creates a special rule for COVID-19 vaccines, requiring coverage within 15 days of the date the recommendation is released.

Permits Free Telehealth with no Impact on HDHPs through 2021

The CARES Act also strikes new ground in allowing telehealth services to be covered under a High Deductible Health Plan (HDHP) before the deductible is met, thus not impacting coverage for Health Savings Accounts (HSAs). This is temporary relief, however, and only allows for the first dollar coverage of such telehealth services for plan years beginning before 2022. To be clear, neither the FFCRA nor the CARES Act mandates no-cost telehealth coverage (except for COVID-19-related screening), but it does permit such no-cost coverage for participants in an HDHP.

Tax-Free Coverage for OTC Products

The CARES Act repeals the long-loathed ACA prohibition on reimbursement for over-the-counter drugs from HSAs, health FSAs, HRAs and Archer MSAs. In addition, it expands the scope of these reimbursement vehicles to permit tax-free reimbursement for menstrual care products, with all provisions taking effect as of January 1, 2020.

Privacy Clarifications

The CARES Act more closely conforms the federal law governing the confidentiality and sharing of substance use disorder (SUD) treatment records, implemented at 42 C.F.R. Part 2 (Part 2), with the Health Insurance Portability and Accountability Act (HIPAA). Because Part 2 imposed stricter requirements on the use and disclosure of Part 2 records than HIPAA, this alignment has been long advocated for by various stakeholders in the health care sector. These changes should simplify the process of sharing Part 2 SUD records between Part 2 programs, group health plans and their business associates for treatment, payment and health care operations. The new rules are effective for uses and disclosure of Part 2 records 12 months after the date of enactment of the CARES Act, with the Secretary of Health and Human Services directed to issue implementing regulations in the interim.

Student Loan Repayment Benefit through 2020

The CARES Act allows employers to contribute up to $5,250 toward an employee’s qualifying student loans. The employer’s student loan payments may be made directly to the lender or via reimbursement to the employee, and are excludable from the employee’s income up to the $5,250 cap for all employer-provided educational assistance benefits during 2020. Previously, employers could only provide assistance for ongoing tuition payments but could not provide assistance for previously incurred loans on a tax-preferred basis. This is another temporary provision, only applying to an employer’s student loan payments after the date of enactment of the CARES Act through December 31, 2020.

The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.

This information was posted with permission from Seyfarth Shaw LLP and was written by:

Benjamin Conley, Partner, Employee Benefits, Seyfarth Shaw LLP

Diane Dygert, Partner, Employee Benefits, Seyfarth Shaw LLP

Jennifer Kraft, Partner, Employee Benefits, Seyfarth Shaw LLP

Kaley Ventura, Partner, Employee Benefits, Seyfarth Shaw LLP