Health Plans Must Cover Cost of OTC Home COVID-19 Tests

On January 10, 2022, the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued joint FAQS About Affordable Care Act Implementation Part 51, Families First Coronavirus Response Act [FFCRA] and Coronavirus Aid, Relief, and Economic Security Act Implementation [CARES] (“FAQs Part 51”) relating to over-the-counter (OTC) COVID-19 diagnostic testing. On the same date, the Centers for Medicare & Medicaid Services (CMS) issued FAQs on “How to get your At-Home Over-The-Counter COVID-19 Test for Free” (“CMS FAQs”). This Alert summarizes the key provisions of the FAQs Part 51 relating to coverage of COVID-19 home tests.

ACTION REQUIRED: Beginning January 15, 2022, non-grandfathered and grandfathered group health plans must provide coverage for OTC COVID-19 tests without cost-sharing requirements, prior authorization, or other medical management requirements, and without an order or individualized clinical assessment by a health care provider. Coverage may, but is not required to, be provided before January 15, 2022.

Self-insured plans will need to make sure they have a way for participants to obtain OTC COVID-19 tests. Fully insured plans can rely on their insurer to provide coverage. Plans that do not cover active employees (such as retiree plans) are exempt from this requirement.


The FFCRA, enacted March 18, 2020, generally requires group health plans, including grandfathered health plans, to provide benefits for certain items and services related to testing for the detection or diagnosis of COVID-19 during the COVID-19 public health emergency. See Cheiron’s prior alert, Special Advisory on the FFCRA. Under the FFCRA, plans must provide this coverage without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements.

The CARES Act, enacted March 27, 2020, amended FFCRA specifying that plans must cover diagnostic items and services without any cost-sharing requirements, prior authorization, or other medical management requirements. See Cheiron’s prior alert, Healthcare Provisions in the CARES Act. The CARES Act requires plans to reimburse a provider for COVID-19 diagnostic testing an amount that equals a negotiated rate (if the plan has such a negotiated rate with the provider); or, the cash price for such service that is listed by the provider on a public website (if it does not have a negotiated rate).

On June 23, 2020, the Departments issued FAQs Part 43, which stated that plans and issuers are required to cover COVID-19 tests intended for at-home testing when the test is ordered by an attending health care provider who has determined that the test is medically appropriate for the individual. As of the date FAQs Part 43 was issued, the FDA had not yet authorized any COVID-19 diagnostic tests to be completely used and processed at home. However, since then the FDA has authorized diagnostic tests for COVID-19 that can be self-administered and self-read at home without the involvement of a health care provider1.

On December 2, 2021, the White House released a statement stating that the Departments would provide guidance by January 15, 2022, on coverage for self-administered and self-read diagnostic tests available either by prescription or over the counter (OTC) (i.e., without either a prescription or clinical assessment by a health care provider). The FAQs published on January 10, 2022, is that guidance.

Coverage of OTC COVID-19 Diagnostic Testing

Individuals who purchase OTC COVID-19 tests during the public health emergency will be able to seek reimbursement from their plan or issuer, with or without an order or individualized clinical assessment by an attending health care provider, as follows:

  • Who Must Be Covered?

Fully, partially, or self-insured group or individual plans must cover OTC COVID-19 tests, including tests obtained without the involvement of a health care provider for all enrolled lives in a health plan that covers active employeesRetiree only plans are not required to provide this coverage. However, retirees and their dependents must also be covered if they are covered under the same plan as active employees.

Medicaid and CHIP programs cover the OTC COVID-19. Traditional Medicare will not cover the OTC self-administered and self-read test. Some Medicare Advantage plans may cover them. Some states may have already required fully insured plans to cover these self-read OTC COVID-19 tests.

CHEIRON OBSERVATION: Some administrators may need additional time to set-up their system if the retiree plan’s participants are co-mingled with the active plan’s participants for administration.

  • What Must Be Covered?

Eight OTC COVID-19 self-administered, self-prescribed, and self-read tests per 30-day period or per calendar month (plan sponsors can choose) must be covered for each individual enrolled life in the plan to be used for diagnosis and treatment. Packaging of multiple tests can be provided. For example, two tests in one box count as two of the eight tests. These eight tests are in addition to tests read by a healthcare professional or a prescribed OTC COVID-19 test.

Plans may not limit the quantity reimbursement for OTC COVID-19 tests to a smaller amount even for a shorter timeframe, say, four tests in 15 days. Plans may not impose any prior authorization or other medical management requirements on participants, beneficiaries, or enrollees that obtain applicable OTC COVID-19 tests via such a direct coverage program, or other method.

  • Will Patient be Responsible for Any Cost?

Below we describe two options that plan sponsors can choose from to comply with the regulations. Under option 1, patients could be balance billed for cost above the Allowed Amount for out-of-network providers. Under option 2, patients must be reimbursed in full for both in- and out-of-network claims. It is possible for a plan to start with option 2 and later switch to option 1 or vice versa.

Option 1 - Safe Harbor Direct Coverage including a direct-to-consumer shipping program: Plans may provide direct coverage for OTC COVID-19 tests to participants, beneficiaries, and enrollees by reimbursing sellers directly without requiring participants, beneficiaries, or enrollees to provide upfront payment and seek reimbursement. In general, a plan that provides direct coverage of OTC COVID-19 tests may not limit coverage to only tests that are provided through preferred pharmacies or other retailers. However, the safe harbor plan may limit reimbursement for out-of-network providers/pharmacies to $12 per test, which could result in patients having to pay for part of the cost.

Under this safe harbor:

          • The direct-to-consumer shipping program may be provided through one or more in-network provider(s) or another entity designated by the plan or issuer.
          • A plan must take reasonable steps to ensure that participants, beneficiaries, and enrollees have adequate access to OTC COVID-19 tests, through an adequate number of retail locations (including both in-person and online locations).
          • Plans must be able to process their preferred pharmacies and direct retailers (including direct to customer shipping programs) with no up-front out-of-pocket cost to the patient.
          • Plans may elect to provide more generous reimbursement to non-preferred pharmacies, up to the actual price of the test.

Option 2 - Non-Safe Harbor: Under this option, the plan may not limit the amount reimbursed for any test.  Plans may require a participant, beneficiary, or enrollee to submit a paper claim for reimbursement with no limitation, which would require patients to pay out-of-pocket first. Plans can also provide limited direct coverage (that is, the patient does not have to pay first), but not comply with all the safe harbor requirements.

CHEIRON OBSERVATIONS: While a plan may use their medical network provider and/or Pharmacy Benefit Manager (PBM), the PBM is more likely in a better position to administer a safe harbor plan. Plans without integrated medical and PBM vendors should take care to avoid the possibility of duplicative coverage (that is, allowing eight tests under medical and another eight under pharmacy).  Plans should communicate to participants how to submit claims so that participants are reimbursed appropriately.

Plans that allow fewer than eight tests per month/30 days through the direct coverage program presumably will not be allowed to limit the reimbursement on out-of-network claims.

  • Steps to Prevent Fraud and Abuse

A plan or issuer may take reasonable steps, such as an attestation, to ensure that an OTC COVID-19 test for which a covered individual seeks coverage from the plan was purchased for the individual’s or enrollee’s own personal use and may require reasonable documentation of proof of purchase with a claim for reimbursement for the cost of an OTC COVID-19 test.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

1The FDA provides information on which at-home tests are authorized for use at: