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COVID-19 and Your Health Insurance

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The COVID-19 pandemic is on everyone's mind. In the U.S., in particular, there is heightened concern about how health insurance plans will cover necessary medical care. Because the American health care system is made up of a patchwork of different health plans, there's no single answer to that question. But we can take a look at some of the most common types of coverage people have, and address the rules that apply to those plans.

Employer-Sponsored Health Insurance

Nearly half of Americans get their health coverage from an employer. These plans include both small group and large group policies, and a significant portion of them, particularly large group plans, are self-insured. That means the employer uses its own money to cover employees' medical costs, as opposed to buying coverage from a health insurance company, and it also means the plans aren't subject to state insurance regulations, but are instead regulated by the federal government.

Prior to mid-March 2020, insurance regulations regarding COVID-19 were coming from the states, so they were only applicable to fully-insured plans (plans in which an insurance company, as opposed to an employer, covers the cost of members' claims). But on March 17, the Families First Coronavirus Response Act (H.R.6201) was enacted by the federal government. The legislation covers a wide range of provisions, including some basic requirements for health insurance plans during the COVID-19 state of emergency. Because it's a federal law, it applies to self-insured plans as well as fully-insured plans, and it also specifically applies to health plans that are grandfathered under the Affordable Care Act (ACA).

What Does H.R.6201 Do?

Testing Is Fully Covered—With Caveats

The H.R.6201 act requires health plans to fully cover COVID-19 testing without any deductible, copay, or coinsurance. This includes the lab services for the test as well as the fees charged by the doctor's office, urgent care clinic, or emergency room where the patient is tested. The law also prohibits health plans from requiring prior authorization for COVID- 19 testing.

But it's worth noting that testing isn't necessarily easy to get or even recommended by experts, even if your health insurance company will fully cover it without prior authorization. And some health insurers will only cover COVID-19 testing if it's ordered by a doctor and considered medically necessary—as opposed to routine testing for asymptomatic people.

Although your health insurance plan will almost certainly cover COVID-19 testing, you may very well find that a test isn't available to you.

Treatment Is Partially or Fully Covered, Depending on Your Plan

If you do have COVID-19 and need medical treatment, will your health insurance cover it? In most cases, the answer is yes. But it's important to understand that "cover" doesn't mean "cover the whole cost." Almost all health insurance plans include cost-sharing in the form of deductibles, copays, and coinsurance, and federal legislation to address the coronavirus pandemic does not require health insurers to waive cost-sharing for COVID-19 treatment (the Heroes Act, H.R.6800, would require that; it passed the House in May 2020 but has not advanced in the Senate).

However, numerous national, regional, and local health insurers are voluntarily waiving cost-sharing for treatment of COVID-19, meaning that patients do not have to pay the copays, deductible, and coinsurance that they would have to pay if they needed treatment for a different illness. Some insurers are waiving cost-sharing only for a short while (eg, only for treatments that occurred prior to June 1, 2020), while others have extended their cost-sharing relief into the fall or through the end of the year. 

It's important to remember, however, that the majority of people with employer-sponsored health coverage are in self-insured plans. Most of these plans contract with a private health insurance company to administer the plan, but claims are paid with the employer's money (not the insurer's money). If your self-insured employer's plan is administered by an insurer that has agreed to waive cost-sharing for COVID-19 treatment, that only applies to your coverage if your employer opts in. This can be confusing, especially because people with self-insured health insurance often don't realize that the plan is self-insured, and their insurance ID card bears the name of a well-known insurer (which is only serving as a plan administrator). If in doubt, contact the customer service number on your insurance card and ask them how COVID-19 costs are covered by your plan.

Affordable Care Act and COVID-19

Most of the treatment that people need for COVID-19 will fall under the general categories of the Affordable Care Act's essential health benefits, which are required to be covered by all non-grandfathered, non-grandmothered individual and small group health plans. But each state defines its own specific requirements for essential health benefits, so there could be some types of treatment that aren't covered, depending on where you live.

Large group health plans are not required to cover essential health benefits. "Large group" means 50 or more employees in most states, but 100 or more employees in California, Colorado, New York, and Vermont. In order to comply with the ACA's employer mandate, large group plans do need to provide "substantial coverage" for inpatient care and physician services, and will thus tend to cover the majority of the care that people need for COVID-19. Again, keep in mind that "cover" doesn't mean they pay for all of it—you'll still have to meet your deductible, pay copays, and pay coinsurance according to the terms of your plan (again, many insurers are waiving these costs for some or all of 2020, but that doesn't necessarily apply if your plan is self-insured).

But about 4% of employers with 200+ employees (and 5% of employers with 5,000+ employees), choose to offer skimpier plans, despite the fact that they face a potential penalty for doing so. The employer mandate was intended to end these scanty "mini-med" plans, but some employers have continued to offer them, particularly to lower-wage workers in high-turnover industries. These plans can have ridiculously low benefit restrictions, such as a $10,000 cap on total claims, coverage for office visits only, no prescription benefits at all, etc.

Unfortunately, although these skimpy plans are considered minimum essential coverage (simply because they're offered by an employer), they would not be much use in terms of actually providing coverage for COVID-19 (or any other serious health condition). If your employer offers one of these plans, you can decline it and enroll in a plan through the health insurance exchange in your state. And since these plans don't provide minimum value, you could also qualify for a premium subsidy in the exchange if you're eligible based on your household income.

Open enrollment for 2020 health plans has ended, but most of the states that run their own exchanges opened up special enrollment periods due to the COVID-19 pandemic (most of them have since ended, although a few are still ongoing as of June 2020). And people who experience various qualifying events can enroll in ACA-compliant coverage mid-year. If the plan your employer offers is a mini-med and you've avoided enrolling in it due to the minimal coverage, you may want to consider enrolling in an ACA-compliant plan if an opportunity is available.

Individual (Non-Group) Health Insurance

If you purchase your own health insurance, either through the exchange or off-exchange, you've got individual market coverage. H.R.6201 applies to all individual market plans, and numerous states have issued similar rules that also apply to these plans.

All individual major medical plans, including grandmothered and grandfathered plans, will cover COVID-19 testing with no cost-sharing, although they can impose restrictions such as requiring that a medical provider orders the test. You might end up having to pay your deductible, copays, and coinsurance if you end up needing treatment for COVID-19, although many insurers have chosen to waive these costs, at least temporarily.

Several states have stepped in to require state-regulated health plans to cover COVID-19 treatment, especially telehealth visits, with no cost-sharing, and those rules apply to individual major medical plans as well as fully-insured employer-sponsored plans.

  • New Mexico is requiring state-regulated health plans (including fully-insured employer-sponsored plans) to cover "medical services" for COVID-19, pneumonia, and influenza, with no cost-sharing. This goes well beyond the rules most states have established to require zero-cost-sharing for testing and sometimes telehealth related to COVID-19.
  • Vermont is requiring state-regulated health plans to waive cost-sharing for COVID-19 treatment.
  • Massachusetts is requiring state-regulated insurance plans to cover COVID-19 treatment with no cost-sharing if it's received in a doctor's office, urgent care clinic, or emergency room, although they stop short of requiring insurers to waive cost-sharing for inpatient treatment.

The ACA requires almost all health plans to cap maximum out-of-pocket costs for covered in-network services (this requirement applies to all plans except grandfathered plans, grandmothered plans, and plans that aren't regulated by the ACA at all). In 2020, the maximum out-of-pocket amount for a single person is $8,150. So as long as your care is considered medically necessary, covered under your plan's rules, provided in-network, and you follow whatever prior authorization rules your plan has, your out-of-pocket costs won't exceed that amount.

And again, many insurers that offer individual market plans have opted to waive members' deductibles, copays, and coinsurance for COVID-19 treatment. So it's possible that you might owe nothing at all if you end up needing medical treatment for COVID-19. Because there's no uniform federal requirement, the specifics are going to vary depending on where you live and what health insurer you use.

Plans That Aren't Regulated by the ACA, Or Uninsured

If your health coverage isn't regulated by the ACA, your coverage for COVID-19 testing and treatment isn't likely to be regulated, or even covered at all. These plans include:

Many of these types of coverage aren't designed to serve as your only health plan. And although others are certainly marketed as adequate stand-alone coverage, they often have glaring holes that become apparent in the case of a serious medical situation. And none of these plans is considered minimum essential coverage, which means you're technically considered uninsured if you're using one or more of these plans on their own.

If you purchased your coverage since 2014 and the insurer used medical underwriting (i.e., they asked you about your health history when you applied), that's a red flag that your plan isn't regulated by the ACA. You'll want to carefully check your policy details to see how services related to COVID-19 are covered under the plan, as they will vary widely from one plan to another.

What You Can Do

If you're concerned that your coverage might not be adequate, check to see if a special enrollment period related to the COVID-19 pandemic is available through the health insurance exchange in your state (they are still available in five states and DC as of June 2020). These special enrollment periods only allow uninsured residents to buy coverage (i.e., people who already have coverage can't use this as an opportunity to switch to a different plan), but keep in mind that if the plan you have isn't minimum essential coverage, you're technically considered uninsured and would be eligible to utilize a special enrollment period related to the COVID-19 pandemic, if one is available in your state.

H.R.6201 also allows states to use their Medicaid programs to cover COVID-19 testing (but not treatment) for uninsured residents. And the legislation allocates $1 billion in federal funding to reimburse medical providers for the cost of COVID-19 testing for uninsured patients. But if you're uninsured and end up needing extensive medical care for COVID-19, the out-of-pocket costs are likely to be substantial. This is why it's so important to enroll in coverage as soon as possible if you're eligible for a special enrollment period (if you aren't, you'll have to wait until the fall to sign up for a plan for 2021, or enroll in your employer's plan if they offer an earlier open enrollment option; to address the COVID-19 pandemic, the IRS is allowing—but not requiring—employers to allow mid-year enrollments, disenrollments, and plan changes ).

New Mexico has opened up its state-run high-risk pool to uninsured residents who suspect they may have COVID-19 and have no other alternative for health coverage. Relatively few states still have operational high-risk pools, but this is an option they can pursue if they do.

States Making Exceptions for Unregulated Plans

  • Washington state COVID-19 requirements for health insurers do apply to short-term health plans, so short-term plans in Washington are required to cover COVID-19 testing with no cost-sharing, and cannot impose prior authorization requirements for COVID-19 testing or treatment.
  • Louisiana is requiring all state-regulated health plans, including short-term health plans, to refrain from canceling policies during the emergency period, and requiring insurers to extend—without medical underwriting—short-term policies that are up for renewal (not all short-term policies are eligible for renewal, but those that are must be allowed to renew without changes during the COVID-19 emergency period).

Medicare and Medicaid

As it became clear that COVID-19 was becoming a significant problem in the U.S., the Centers for Medicare and Medicaid Services (CMS) issued new guidance for private insurers that offer Medicare Advantage plans, Part D plans, and Medicare-Medicaid plans. The regulation helps to enhance access to telehealth services, relax provider network and referral requirements, and make it easier for beneficiaries to obtain an adequate supply of necessary prescription drugs.

H.R.6201 provided additional security for the millions of Americans covered by Medicare, Medicaid, and CHIP, requiring these programs to cover COVID-19 testing with no cost-sharing. These rules apply to private Medicare Advantage and Medicaid managed care plans, as well as the traditional fee-for-service programs that are run by the state and federal governments.

But as is the case with other types of health coverage, out-of-pocket costs for COVID-19 treatment (as opposed to just testing) will vary depending on the plan you have. Many Medicare Advantage insurers are waiving all cost-sharing related to COVID-19 treatment, at least temporarily. And many Original Medicare beneficiaries have supplemental coverage—from Medicaid, a Medigap plan, or an employer-sponsored plan—that will pay some or all of their out-of-pocket costs.

A Word from Verywell

The COVID-19 pandemic is uncharted territory for everyone, including health insurers, medical providers, and the state and federal agencies that oversee our health care system. And the situation is evolving rapidly, with new regulations and legislation being issued by states and the federal government. If you don't have health insurance coverage, make sure you understand whether you might be eligible for a special enrollment period during which you could sign up for a self-purchased plan or enroll in a plan offered by your employer.

If you do have health insurance, make sure you understand how it works: What are the out-of-pocket amounts? Is the insurer waiving deductibles, copays, and coinsurance for COVID-19 treatment? How does prior authorization work? What telehealth services are available? Which doctors and hospitals are in-network? These are all things you'll want to understand while you're healthy, as opposed to trying to figure out while also navigating a health scare.

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Article Sources
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