CARES Act Provisions Impact Employer-Sponsored Group Health Plans, HSAs and Student Loan Payment Assistance Benefits

Congress has enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the third major federal piece of legislation responding to the COVID-19 pandemic.  The CARES Act follows the enactment of the Families First Coronavirus Response Act (“FFCRA”) on March 18 and an $8.3 billion emergency funding bill signed into law on March 6.

The CARES Act expands rules already enacted under FFCRA that require group health plans (“GHPs”), whether insured or self-funded, to provide 100% coverage for COVID-19 tests and related office visits without any cost-sharing from the GHP participant and without any prior authorization. See our previous alert for more details.  The CARES Act provides additional details on two related issues:

1. When paying benefits for the COVID test, the GHP must pay either the rate specified in a contract between the provider and the GHP or insurer, or, if there is no contract or other negotiated price, the cash price posted by the provider.
2. When it becomes available, GHPs must also cover 100% of the cost of a COVID-19 vaccine without cost-sharing.

The CARES Act also contains several provisions relating to health savings accounts (“HSAs”), health flexible spending account plans (“Health FSAs”), and health reimbursement arrangements (“HRAs”).  Earlier this month, the IRS provided guidance that allows (but does not require) high deductible health plans (“HDHP”) to provide benefits for testing and treatment of COVID-19 before the deductible has been met. The CARES Act added the following new rules:

• For plan years that begin on or before December 31, 2021, all telehealth and other remote care services are permitted to be covered by an HDHP before the deductible has been met without disqualifying the plan as an HDHP or disqualifying the participants from being able to contribute to an HSA.  This rule applies whether or not the telehealth services are related to COVID-19 diagnosis and treatment.
• Tax-free distributions from HSAs for over-the-counter (“OTC”) drugs (whether or not they are prescribed) and “menstrual care products” (tampons, pads, liners, cup, sponge and similar products) are permitted for expenses incurred after December 31, 2019.  Health FSAs and HRAs are now allowed, but not required, to provide coverage for such expenses as well.

Action items for employers:

• Contact insurers or third-party administrators concerning the changes in the law.
• Amend plan documents and summary plan descriptions for health FSAs and HRAs if the employer wishes to provide benefits for OTC drugs and menstrual care products in health FSAs and HRAs. 
• Inform employees about the changes to their benefits and in the law regarding HSAs.

The CARES Act also provides that an employer can provide up to $5,250 in tax-free student loan payment assistance to their employees between now and the end of 2020.