Coverage of OTC COVID-19 Tests

At the beginning of the pandemic, COVID-19 testing was a lengthy process, requiring a medical assessment and a doctor’s prescription and authorization. Starting in January 2022, federal agencies issued guidance for health insurers regarding requirements for coverage. Insurance plans and issuers must cover the costs of tests during the public health emergency without imposing any cost-sharing requirements, specifically for FDA-approved over-the-counter (OTC) tests. 

What This Means For Insurance Companies

The Biden Administration wants to make sure more people are able to access free COVID-19 testing during this pandemic and offering OTC tests is a manageable way to do so. Individuals with private health insurance covered or covered by a group health plan now are able to purchase OTC tests authorized, cleared, or approved by the FDA.

The current administration is encouraging insurers to set up programs that allow people to get the tests directly through preferred pharmacies, or retailers with no out-of-pocket costs. If insurers go this route, it eliminates the process for consumers to submit a claim for reimbursement. Covered individuals don’t need to meet any cost-sharing requirements such as deductibles, co-payments, coinsurance, prior authorization, or other medical management requirements. 

Ways insurance companies are offering free OTC tests:

  • Having individuals purchase a test out of pocket then submit a claim for reimbursement 
  • Providing coverage through pharmacy networks or direct-to-consumer shipping programs

Requirements insurance companies are responsible to meet:

  • Cover 8 free OTC at-home tests per covered individual per 30-day cycle
  • Still responsible for reimbursement for consumers if tests are purchased outside of the network, at a rate up to $12 per test
  • If there is not a process in place for individuals to obtain a test with no upfront costs, the insurer must reimburse the full cost even if the test costs more than $12

What This Means For Individuals

Thanks to new federal guidelines, whether you purchased your own health plan or you get health insurance through your job, you have access to free OTC COVID 19 tests. If you purchase the tests out of pocket, be sure to keep your receipt if you need to submit a claim for reimbursement. 

If you need to purchase more than one test at a time, you are still eligible for reimbursement, regardless of whether the tests are bought all at once or at separate times throughout the 30-day period. However, if the employer requires that individuals get tests multiple times per week as a condition of employment, then the insurer is not required to provide reimbursement. 

In the event that an individual is uninsured, there are still resources for free OTC tests. The current administration is delivering free tests to all Americans who want them. To request the free tests delivered to your address, you can fill out their information at this website

Answers To Your Questions

The US Department of Labor, the Treasury, and Health and Human Services issued FAQs regarding group health plan coverage of OTC tests to clarify any concerns. Here are 5 FAQs from their website:

  1. Do plans and issuers have flexibility in how they establish a direct-to-consumer shipping program and direct coverage through an in-person network?

Yes. Issuers must provide direct coverage by ensuring individuals have adequate access to OTC tests with no upfront out-of-pocket expenses and are available through at least one direct-to-consumer shipping avenue and at least one in-person avenue. When implementing an in-person avenue, the issuer must ensure that individuals have access to tests through an adequate number of locations. 

  1. Will the Departments take enforcement action against an issuer that is temporarily unable to provide adequate access to tests through its direct coverage program due to a supply shortage?

No. The insurance company will not be considered out of compliance. In that circumstance, the issuer may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for tests purchased outside of the direct coverage program.

  1. Is an issuer permitted to address suspected fraud and abuse related to the reimbursement of OTC COVID-19 tests purchased by an individual from a private individual or via online auctions, resale marketplaces, or resellers?

Yes. Issuers are permitted to take reasonable steps to prevent, detect, and address fraud and abuse. The insurance company can establish a policy that limits coverage of OTC tests purchased without the involvement of a health care provider to tests purchased from established retailers that would typically be expected to sell OTC COVID 19 tests. 

Insurance companies can disallow reimbursement for tests that are purchased from a private individual via an in-person or online person-to-person sale, or from a seller that uses an online auction or resale marketplace. The insurance company must provide information to the individuals about what is disallowed.

  1. Do the coverage requirements that use a self-collect sample but require processing by a laboratory or other health care provider to return results (such as home-collection PCR tests that can be purchased directly by consumers)?

No. A COVID-19 test is not approved or authorized to be self-administered and self-read without the involvement of a health care provider. 

  1. How does an insurance coverage of OTC COVID-19 tests impact health flexible spending arrangements and similar account-based plans?

The costs of OTC tests purchased by an individual is a medical expense; thus, it has generally been reimbursable by health flexible spending arrangements (FSAs) and health reimbursements arrangements (HRAs).

An individual cannot be reimbursed more than once for the same medical expense. The cost of OTC tests paid or reimbursed by a plan or issuer cannot be reimbursed by a health FSA or HRA. 

Insurance companies may wish to advise individuals not to use a health FSA or HRA debit card for OTC tests. 

For more extensive information, here is the website for a full list of FAQs.

Staying Up-to-date With Alltrust

As the pandemic is ongoing, it’s become easier for individuals to get tested for COVID 19 and get treatment, if necessary. Insurance companies have had to constantly adapt to the everchanging public health emergency to ensure individuals get the right care. 

At Alltrust, we understand this pandemic can still be difficult for businesses and individuals alike to navigate and we offer our services to ensure employers and employees stay healthy. Contact us for more information on providing free OTC COVID tests. 


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