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CARES Act Prompts Changes to Employer-Sponsored Health Plans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020, contains several provisions—some mandatory and some optional—that affect employer-sponsored group health plans.

COVID-19 Testing

First, the CARES Act expanded certain provisions of the Families First Coronavirus Response Act (FFCRA), which was enacted and became effective on March 18, 2020. The FFCRA requires group health plans to cover products and services used in the testing and diagnosis of COVID-19 on a first-dollar basis, without any cost-sharing or medical management requirements, such as preauthorization. Retiree-only plans, plans providing only excepted benefits (e.g., limited-scope dental and vision plans), and certain other plans are exempt from the FFCRA’s COVID-testing mandate.

Building on the FFCRA requirements, the CARES Act expanded the types of COVID-19 tests that must be covered to include:

  • products approved by the U.S. Food and Drug Administration (FDA);

  • products for which the developer has requested or intends to request an emergency use authorization by the FDA;

  • products developed in and authorized by a state that has notified the U.S. Department of Health and Human Services (HHS) of its intention to review COVID-19 tests; and

  • products that HHS approves through published guidance.

The CARES Act also governs the amount that plans must cover for COVID-19 testing. First, healthcare providers are required to publish their “cash price” for COVID-19 tests on a public website. Plans may reimburse in-network providers for COVID-19 tests at previously negotiated rates. For out-of-network providers, plans must either reimburse the published “cash price” for the test, or negotiate a lower price.

These CARES Act provisions immediately modify the FFCRA COVID-19-testing provisions, which took effect March 18, 2020.

Note also that the Internal Revenue Service (IRS) recently, in Notice 2020-15, permitted high-deductible health plans (HDHPs) to cover both COVID-19 testing and treatment on a first-dollar basis without making participants ineligible to make health savings account (HSA) contributions.

Preventive Health Services

The CARES Act makes preventive care related to COVID-19 part of the Affordable Care Act (ACA) preventive care coverage mandate. Group health plans must cover COVID-19 preventive care (such as vaccines) on a first-dollar basis without any cost sharing. Although there currently is no preventive care related to COVID-19, this requirement will become effective within 15 business days after a service receives an “A” or “B” rating by the U.S. Preventive Services Task Force or a recommendation by the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention. Under the general ACA preventive care rules, all other preventive services have a lead-time of one year between approval and requirements to cover.

This requirement does not apply to retiree-only or excepted benefit plans.

Over-the-Counter Medicines and Menstrual Care Products

The CARES Act removed a restriction put in place by the ACA on account-based plans, including health flexible spending accounts (FSAs), HSAs, and health reimbursement arrangements (HRAs), reimbursing the costs of over-the-counter (OTC) medicines without a prescription. While this CARES Act provision is effective for amounts reimbursed or expenses incurred after December 31, 2019, most FSAs and HRAs will need to be amended to allow for reimbursement of OTC medicines before this coverage may be offered.

The CARES Act also added menstrual care products to the Internal Revenue Code definition of “medical care” that applies to account-based plans, meaning that HSAs, FSAs, and HRAs can reimburse participants for these costs. This change applies to expenses incurred after December 31, 2019.

HDHP Pre-Deductible Coverage of Telehealth

The CARES Act permits, but does not require, HDHPs to waive cost-sharing or provide coverage prior to satisfaction of the deductible for general telehealth services without affecting participants’ eligibility to make or receive HSA contributions. This provision became effective on March 27, 2020, and applies to plan years beginning on or before December 31, 2021.

This provision is a temporary safe harbor, intended to allow individuals to receive medical care without going to crowded hospitals, clinics, or medical practices during the COVID-19 pandemic.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.National Law Review, Volume X, Number 97

About this Author

Timothy Stanton, Ogletree Daikins Law Firm, Data Privacy and Employment Attorney

Tim Stanton is an energetic advocate for and trusted advisor to inside counsel and benefits and HR executives.

His clients include: retailers and wholesalers; insurance, banking and financial services firms; and food companies and manufacturers, as well as colleges and universities.

Tim actively counsels clients on the roller coaster ride that is national health care reform, as well as on ERISA fiduciary duties, health information privacy and security, retiree medical age discrimination, and consumer-directed health...

Kristine Bingman, of counsel, Portland
Of Counsel

Kristine works with clients on a variety of issues related to health and welfare and retirement plans. Her practice includes advising clients about all aspects of ERISA and Internal Revenue Code compliance as it relates to employee benefit plans, as well as drafting and amending plan documents, and negotiating plan service provider agreements. She advises clients on compliance with health care reform, COBRA, HIPAA, nondiscrimination rules, fiduciary duties, qualified domestic relations orders, reporting and disclosure requirements, Code Section 125 cafeteria plans, and...


Hillary Sizer joined Ogletree Deakins’ Chicago office as an associate in 2019. She assists clients with ERISA compliance matters, focusing on health and welfare plans. She graduated in 2019, with distinction, from Georgetown University Law Center where she earned a Master of Laws in Taxation and an Employee Benefits Certificate. She is a 2018 graduate of the Lewis & Clark Law School in Portland, Oregon. While there, she spent a summer externing for the Oregon Tax Court. She received a BA in Philosophy, cum laude...