CARES Act Impact on Health Insurance

On March 27, 2020,  the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law. The CARES Act amends certain provisions of the Families First Coronavirus Response Act (“FFCRA”). CARES also temporarily eliminates the application of deductibles for certain services in HSA Qualified High Deductible Health Plans (HDHPs), and temporarily expands the list of qualified expenses reimbursable through HSAs, HRAs, and FSAs.

Amendments to the FFCRA

The CARES Act clarifies that employers will not need to pay employees for the emergency sick leave or emergency FMLA (“eFMLA”) in excess of the daily and aggregate amounts employers are otherwise obligated to pay.  In addition, the CARES Act provides:

  • – Rehired employees are immediately eligible to take eFMLA if they were laid off after March 1, 2020 but had worked for the employer for at least 30 of the last 60 calendar days prior to the layoff.
  • – If tax credits do not fully cover an employer’s leave payments, the employer may request an expedited advance from the IRS. A claim form will be available in the near future.
  • – The IRS will waive penalties for an employer’s failure to make a payroll tax deposit if it determines the failure was in anticipation of the receipt of refundable tax credits.

The CARES Act also changes some of the FFCRA provisions applicable to group health plans by:

  • – Requiring group health plans to cover a wider scope of COVID-19 diagnostic tests from States and other entities approved by the Secretary of the Department of Health and Human Services.
  • – Providing a pathway for COVID-19 pricing negotiations between group health plans and health care providers for diagnostic testing related to COVID-19.

Health Plan Related Changes

The CARES Act impacts health plans in the following ways:

• HSA Qualified HDHPs are temporarily permitted to provide virtual health (aka tele-health, tele-medicine, tele-doc) and other remote care services without the HDHP’s deductible. (Note: This provision is effective immediately and will end with the last day of the plan year that begins on or before December 31, 2021.)

• Over-the-counter (OTC) medications and drugs, as well as menstrual care products may be reimbursed through a health savings account (“HSA”), flexible spending account (“FSA”) or health reimbursement arrangement (“HRA”).  Note: These changes apply to amounts paid (for HSAs) or incurred (for FSAs and HRAs) after December 31, 2019.

• Group health plans are required to cover, without cost-sharing, any qualifying coronavirus preventative service. As a reminder, the term “cost sharing” refers to health insurance copays, deductibles, and coinsurance. (Note: This requirement is effective for any particular service within 15 days of when the US Preventative Services Task Force or the Advisory Committees on Immunization Practices deems the service or vaccine as qualified.)

Additional Relevant Provisions

  • – The Department of Health and Human Services will issue guidance within 180 days regarding the sharing of patients’ protected health information during the declared public health emergencies with respect to COVID-19.
  • – Health plans will be required to update their HIPAA notice of privacy practices to reflect new regulations that will be issued within the next year.