Additional Guidance Released on Coverage for OTC COVID-19 Tests

COVID-19 Update

Date: February 07, 2022

On February 4, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) issued FAQs Part 52 to modify and further clarify the over-the-counter (OTC) COVID-19 test coverage requirements described in FAQs Part 51, which requires coverage of tests purchased without a prescription or the involvement of a health care provider. The modifications relating to the direct coverage safe harbor (set forth in FAQs Part 52, Q1) are prospective and effective February 4, 2022. The remainder of FAQs Part 52 provides clarifications to the OTC COVID-19 test coverage requirements effective January 15, 2022.


As described in our January 2022 client bulletin, FAQs Part 51 require health plans and insurers to cover OTC COVID-19 tests intended for diagnostic purposes without cost sharing, prior authorization, or other medical management requirements if purchased on or after January 15, 2022 and during the public health emergency. FAQs Part 51 provide that health plans and insurers are strongly encouraged, though not required, to provide coverage for OTC COVID-19 tests through a “direct coverage” program (i.e., one where the health plan or insurer pays the cost of the OTC COVID‑19 test directly to the seller rather than requiring a covered person to purchase the test and submit a request for reimbursement). If the direct coverage program is administered under the safe harbor described in FAQs Part 51, reimbursement of tests purchased from a non-participating retailer may be limited to $12 per test.

Requirement for Direct-to-Consumer Shipping Option

To meet the requirements of the direct coverage safe harbor, OTC COVID-19 tests must be available to employees through both a direct-to-consumer shipping program (i.e., mail order program) and a pharmacy network. A health plan or insurer generally must offer at least one in-person option and at least one direct-to-consumer shipping option. In‑person options may include retail pharmacies, non-pharmacy retailers (e.g., through a coupon for use at that retailer), or alternative distribution sites established by or for the health plan or insurer. Direct-to-consumer shipping options may be available from multiple sources, need not be run through a single platform, and may allow for orders to be placed online or by telephone.

Coverage of Shipping Costs and Sales Tax

When an OTC COVID-19 test is obtained through a safe harbor direct coverage mechanism (such as through a participating mail order service), health plans and insurers must cover reasonable shipping costs in a manner consistent with other items or products provided via mail order by the health plan or insurer. When a covered test is purchased in another manner, the health plan or insurer must cover the cost of the test as well as any applied sales tax and shipping costs (although, if the health plan or insurer offers a safe harbor direct coverage program, the total reimbursement may still be limited to $12 per test).

Impact of Supply Shortages on Safe Harbor Status

A health plan or insurer’s coverage program will not meet the direct coverage safe harbor unless the health plan or insurer takes reasonable steps to ensure covered persons have access to OTC COVID-19 tests through an adequate number of retail locations. The Departments will not take enforcement action against health plans or insurers who establish a direct coverage program that otherwise meets the requirements of the safe harbor but is temporarily unable to provide adequate access due to a supply shortage. The Departments may request information from a health plan or insurer (e.g., the number and location of in‑person options) to ensure that the program satisfies the adequate access requirement of the safe harbor.

Exclusion of Coverage for OTC COVID-19 Tests Purchased through or for Resale

To discourage problematic behaviors, health plans and insurers may limit reimbursement of OTC COVID-19 tests to established retailers that would typically be expected to sell OTC COVID-19 tests. Health plans and insurers are not required to provide coverage for OTC COVID-19 tests purchased from private individuals, online auctions or resale markets. Health plans and insurers may impose a policy that requires reasonable proof of purchase that clearly identifies the product sold (i.e., OTC COVID-19 test) and the seller.

Limitation of Direct Coverage to Certain Manufacturers

A health plan or insurer can limit direct coverage to certain tests (e.g., tests provided by a manufacturer with which a health plan or insurer has a specific contract) but may not fully exclude coverage for other OTC COVID-19 tests. Any tests that are subject to the coverage requirement but excluded from the direct coverage program must be covered as non-network tests.

Impact on Self-Administered but Provider-Read Tests

Health plans and insurers are not required to provide coverage for at-home COVID-19 tests that use a self-collected sample, but require processing at a lab or with a health care provider. However, health plans and insurers are required to provide coverage for at-home COVID-19 tests when ordered by an attending health care provider under previous guidance from the Departments.

Reimbursement by Health Flexible Spending Accounts or Similar Account-Based Plans

An OTC COVID-19 test purchased by an individual is a medical expense and is generally reimbursable by a health flexible spending account (FSA), a health reimbursement arrangement (HRA) or a health savings account (HSA). FAQs Part 52 reiterate that an individual cannot be reimbursed more than once for the same medical expense and that OTC COVID-19 tests paid for or reimbursed by a health plan or insurer cannot be reimbursed by a health FSA or HRA. Similarly, OTC COVID-19 test costs that are actually paid for or reimbursed by a health plan or insurer are not qualified medical expenses for purposes of an HSA.

Participant Communications

The Departments encourage health plans and insurers to provide communications about the coverage of OTC COVID‑19 tests. Specifically:

  • Health plans and insurers should ensure that covered persons are aware of key information needed to access OTC COVID-19 testing, such as which tests are available under each option of a direct coverage program.
  • If a health plan or insurer implements a policy that disallows reimbursement for OTC COVID-19 tests from certain resellers, the health plan or insurer should provide information to covered persons regarding the retailers from which purchased tests are generally covered and general information about the types of resellers from which purchases are not eligible for reimbursement.
  • Health plans and insurers should advise covered persons (i) not to seek reimbursement under an FSA/HSA/HRA for the cost of a test that is reimbursed by the health plan or insurer and (ii) not to use an FSA/HSA/HRA debit card to purchase tests for which reimbursement will be sought.

For more information, please contact:

Stephen R. Penrod

Kim Wilcoxon

Beth A. Mandel

Tenechia D. Lockhart

or any member of our Employee Benefits & Executive Compensation group.


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