California, Other States and Insurers Eliminate Cost Sharing for Coronavirus Testing

Author: Jessica Webb-Ayer, XpertHR Legal Editor

March 13, 2020

With the number of coronavirus (or COVID-19) cases steadily rising in the US, states and insurers are trying to alleviate the pressure on citizens by eliminating cost sharing for coronavirus testing. Cost sharing generally refers to how health insurance benefit plan costs are shared between an individual and an insurer and includes deductibles, co-payments and co-insurance that individuals typically pay out of their own pockets for health care they are provided.

The California Department of Insurance (CDI) has issued a bulletin to health insurers directing them to waive cost-sharing amounts for all medically necessary screening and testing for the coronavirus. In the bulletin, the CDI stressed that it wanted "to ensure that cost does not create a barrier for consumers receiving medically necessary screening and testing for COVID-19," and noted that the bulletin would remain in effect until further notice.

California is not the only state to eliminate cost sharing for coronavirus screening and testing. Other states that have circulated directives discussing similar measures include:

More states are expected to follow suit. However, these state mandates generally only apply to insured health plans, since the Employee Retirement Income Security Act (ERISA) preempts state law for self-insured plans. As a result, self-insured plans do not have to comply with state insurance mandates.

Although these state mandates do not apply to self-insured plans, at least one insurer (Cigna) has extended free COVID-19 testing to self-funded employer plans as well. Many insurers in states without directives have also decided to waive cost sharing for coronavirus testing.

IRS Issues Guidance Related to High-Deductible Health Plans

In Notice 2020-15, the IRS also confirmed that high-deductible health plans (HDHPs) can cover coronavirus costs without jeopardizing their status. An HDHP is a health insurance plan with higher deductibles and lower premiums than the average health plan and is typically linked to a health savings account (HSA). An HSA is a tax-sheltered savings account that individuals can use to pay for qualified medical expenses.