Insurers Required to Offer COVID-19 Tests At No Cost To Plan Members

Members of private insurance plans are allowed eight over the counter tests per calendar month

Six months into the Biden administration’s mandate that private insurers cover at-home COVID-19 rapid tests, things are going a lot smoother than they did out of the gate.

Most insurers have since worked out the details, and Medicare is now getting into the act, covering at-home tests for Part B and Advantage members. Following an initial surge in demand, COVID tests are also readily available on pharmacy counters and through mail order providers.

How did we get here?
In January, the Biden administration offered up a potentially powerful tool for combatting the pandemic-no-cost-to-consumer over-the-counter tests for people with private insurance.

The mandate for insurers to cover over-the-counter tests came down from the White House, along with the Department of Labor, Health and Human Services, and the Department of Treasury. They announced that private health insurance plans will be required to cover over-the-counter COVID-19 diagnostic tests effective Jan. 15, 2022.

The rule requires insurers to offer the tests to plan members with no member cost share, regardless of medical necessity.

To start, members were reimbursed for purchases from pharmacies using a prescription drug reimbursement or coordination of benefits claim form. But most plans quickly began working on methods to distribute those tests through their preferred pharmacy carriers through a “direct coverage system.”

Under the White House program, members of private insurance plans each are allowed eight tests per calendar month. So, for example, a family of four could receive 32 tests each rolling calendar month.

Tests could be individually packed, or they could be bundled — say two or more to a box — and still be eligible for the program.

The program incentivized plans to create a direct-coverage system that eliminates the need for the members to pay up front.

Through direct-coverage plans, members get their tests through their insurer at the point of sale, either through a bricks-and-mortar store by showing their pharmacy benefit card, or through mail order. Members get those tests without up-front costs, provided they use the in-network system.

The benefit to the insurer for setting up a direct system was that plans could then limit how much is spent per test. With a direct system in place, if members use an out-of-network provider, they would still get reimbursed, but with a per-test cap on each test — $12 per test or less.

Without that direct coverage option, there is no limit to how much each test can be reimbursed for, potentially opening the door to runaway inflation or price gouging.

The program allows insurers to require receipts, and they may ask members to attest that the tests are for personal use and not for resale, won’t be reimbursed somewhere else, and that they aren’t solely for employment purposes.

All of this is in addition to the program that rolled out in January that will mail up to two sets of four rapid tests to peoples’ homes, paid for by the federal government.

It is important to note that the cost-free over-the-counter program does not directly apply to Medicaid plans, but the Centers for Medicare and Medicaid Services (CMS) does mandate that tests be covered in some way for Medicaid or CHIP policyholders, but the details vary by state.

Medicare Part B and Advantage plans began to offer no-cost tests in April
Some initial reports came in when the tests were first announced saying insurers hadn’t been given enough time to update their systems on such short notice to be ready to reimburse members immediately. One challenge was that at-home tests didn’t fit neatly into established billing code categories.

Another worry among plans and employers is the cost, and specifically, what those costs will do to premiums in the long run.

The rule requires insurers to offer the tests to plan members with no member cost share, regardless of medical necessity.

With tests averaging $15 a piece, that would add $480 in claims for a family of four every month. Over a year, that adds up to an additional $5,760 in claims if every family ordered the maximum number of tests. Those are claims that were not factored into cost estimates when the annual premiums were set for the year.

With multiple methods of reimbursement, some analysts also worry that unscrupulous members may try to be reimbursed for the maximum number of tests through both the reimbursement system and the point-of-sale options, meaning cross-system record keeping between health plans and pharmacy benefit plans will become essential.

When the program was initially announced, a run on rapid tests meant that few pharmacies were able to keep them in stock. But at this point supply has largely caught up, and shelves typically have readily available tests.

Still, there is the open question of unplanned costs to insurers, and what that is going to mean for premiums down the road.


MICHAEL GIUSTI, MBA, is senior writer and analyst for