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Group Health Plan Advisory (COVID-19): CARES Act – Employer Health Plan Effects

March 30, 2020
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group health advisory

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Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27. This enormous bill (880 pages) provides $2.2 trillion to address the coronavirus crisis. Provisions in the Act address issues concerning health and welfare plans, retirement plans, financial aid to for-profit and not-for-profit entities as well as individuals. This advisory focuses on the provisions affecting health and welfare plans.

Tax-Advantaged Accounts

Retroactive to January 1, 2020 individuals can use funds from health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) to purchase over-the-counter drugs. This is a permanent repeal of the Affordable Care Act provision requiring that over-the-counter medicines and drugs (other than insulin) must be prescribed to be eligible for reimbursement using tax-advantaged accounts.

The CARES Act also provides that menstrual products (e.g., tampons, pads, liners, cups, sponges, or similar products) are added to the list of preventive medications that must be provided at no cost to members enrolled in any health plan.

Coronavirus-Related Medical Expenses

All health plans must provide coverage for the cost of COVID-19 testing, including the related office visit with no member cost-sharing during the emergency period. This includes tests not yet FDA-approved.

Group health plan payments for coronavirus testing will pay either the negotiated rate with the provider or a cash price, which the provider must publicize on a public website.

All group health plans (including grandfather plans) must cover preventive measures when they become available with no member cost-sharing.

High Deductible Health Plans (HDHPs) Compatible with Health Savings Accounts

HDHP’s can provide first dollar coverage for telehealth or other remote care services for plan years beginning on or before December 31, 2021. This provision is not mandatory. Carriers providing fully insured plans will decide whether to include this option in their plan designs. Employers using self-funded plans must decide on this option.

Oswald’s analytics team estimates that the addition of this provision to an HDHP would cause an immaterial increase to the plan’s gross costs.

Oswald Observations

Employers sponsoring group health plans must give enrolled members a Summary of Material Modifications (SMMs) describing the above changes. Sponsoring employers using fully insured plans will be given the information necessary for the SMMs by their insurance carriers. Sponsoring employers using self-funded plans should work with their third-party administrators to document the changes.

While the SMMs technically do not have to be issued until 210 days after the close of the plan year in which the change is adopted, earlier communications are encouraged, especially considering the current crisis.

Self-insured employers will also have to notify their plan administrators and stop loss carriers about any of the above changes the employer adopts.

Department of Labor Filings

The CARES Act gives the DOL authority to delay filing requirements, which may include Form 5500 filings.

The CARES Act will cause a flurry of regulations from numerous government agencies. Oswald will provide summaries of these regulations and the necessary action steps as soon as they are issued.


Please contact your Oswald client team representative for further information.

Oswald Companies | Health Care Reform Implementation
Danielle Jarvis, Compliance Team Leader | 216.649.7384
Luke Clark, Sr. Benefits Consultant | 216.367.8758

Disclaimer: Materials are solely for informational purposes as an educational resource. Please contact counsel to obtain advice with respect to any specific issue.