The following article was first posted on the Carmody Torrance Sandak & Hennessey LLP's Labor and Employment blog and is reposted here with permission.


Effective Jan. 15, 2022, group health plans and insurers are required to cover the cost of over-the counter, at home, COVID-19 tests.

The U.S. departments of Labor, Health and Human Services, and Treasury have issued FAQ guidance regarding the requirement for health plans and insurers to provide reimbursement of the cost of OTC COVID-19 tests.

Employers should communicate with their insurer as the insurer has the option to either provide reimbursement to the participant or provide the tests directly through pharmacies, with no upfront costs by the participant.

Below is a summary of some of the highlights of the new guidance.

  • Plans and issuers must cover the costs of OTC COVID-19 tests, including tests obtained without the involvement of a health care provider. However, plans and issuers are not required to cover the costs of a test that is for employment purposes. It is not clear at this time how a plan would know whether a test is for employment purposes.
  • Plans and issuers are ‘strongly encouraged’ to meet the coverage requirement through ‘direct coverage’ so plan participants do not have to provide upfront payment and seek reimbursement. Under this option, plans may provide for direct coverage through its preferred pharmacy network and a direct-to-consumer shipping program. In doing so, plans are still required to reimburse the purchase of OTC tests purchased outside the network at the lesser of the actual cost or $12 per test. If a plan or insurer does not use the direct coverage option, and uses a reimbursement process, they are required to reimburse the full cost of a test, even if it exceeds $12 per test.
  • Plans and issuers may limit coverage to eight tests per 30-day period or per calendar month. This means a covered family of four can get 32 tests per month for free. There is no limit on the number of COVID-19 tests that must be covered when ordered or administered by a health care provider.
  • Plans and issuers may have reasonable procedures to ensure that an OTC COVID-19 test is for personal use. For example, a plan could require an attestation that the test is for personal use, is not for resale, has not been reimbursed by another source and is not for employment purposes. However, any such requirement that unduly delays reimbursement or access is not reasonable.
  • Education of plan participants is encouraged, including information on how to obtain OTC COVID-19 tests directly from the plan or issuer, how to submit a claim for reimbursement, and information about the differences between OTC COVID- 19 tests and tests performed or ordered by a health care provider.

Additional FAQs designed for employees were released by CMS. Question seven addresses how the uninsured will be able to obtain free OTC COVID-19 tests, indicating that a website will be established where a request for at home delivery of tests can be submitted.


About the authors: Mark Williams is an attorney who specializes in all aspects of employee benefits with Carmody Torrance Sandak & Hennessey LLP. Timothy Klimpl is an attorney with experience providing ERISA advice.

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.