Health and Welfare Benefit Plan Relief Under the CARES Act

COVID-19 Resources Employee Benefits & Executive Compensation

Immediately following the relief provided under the Families First Coronavirus Response Act (“FFCRA”), Congress provided additional relief to health and welfare benefit plans as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted by Congress on March 27, 2020.  The CARES Act expands and further clarifies certain employee benefits provisions previously put in place by the FFCRA.  This Alert summarizes the key changes to health and welfare benefit plans under the CARES Act.

See our recent Employment and Employment Benefits Practice client alerts, “What Employers Need to Know About the Families First Coronavirus Response Act” and “Navigating Employee Health and Welfare Benefits Issues in the COVID-19 Era”, for an overview of the employment and employee benefits provisions of the FFCRA.

Coverage for Testing and Preventative Services: The FFCRA, which was passed on March 18, 2020, requires group health plans to cover FDA approved COVID-19 testing and related services at no cost to participants and with no prior authorization or medical management requirements.  The CARES Act expands the types of tests covered with no cost sharing to include diagnostic tests for which a developer has requested or intends to request FDA Emergency Use Authorization, diagnostic tests authorized by an individual State, or tests deemed appropriate by the U.S. Department of Health and Human Services.

In addition, the CARES Act requires health plans to cover (without cost sharing) future COVID-19 preventive and mitigating treatments that have received an “A” or “B” in the recommendation of the United States Preventive Services Task Force or an immunization that has received a recommendation by the CDC’s Advisory Committee on Immunization Practices.  This coverage requirement is effective 15 business days after the recommendation is made (which is much faster than normal).

Reimbursement for COVID-19 Testing: The CARES Act requires health plans to reimburse providers for COVID-19 at the same rates negotiated prior the declaration of the coronavirus public health emergency.  If no rates were negotiated, the reimbursements must be at the cash price for testing listed on the provider’s website.

Over-the-Counter Drugs and Medicines: The CARES Act removed an Affordable Care Act restriction on reimbursements from certain health savings accounts for over-the-counter medicines or drugs without a prescription.  Employers can (but are not required to) now allow reimbursement of over-the-counter drugs and medicines not prescribed by a physician and certain menstrual care products under their health reimbursement accounts (“HRAs”), health savings accounts (“HSAs”), and health care flexible spending accounts.  For HSAs, this provision applies to amounts paid after December 31, 2019 and, for HRAs, it applies for expenses incurred after December 31, 2019.

HRA plans, which include all IRS permitted out-of-pocket expenses, will benefit from this change.  HRA plans, which define eligible expenses more narrowly (such ones only reimbursing deductible or coinsurance amounts), will not be affected by the change.

Expanded Use of Telehealth in High Deductible Health Plans (“HDHPs”): HDHPs with HSAs can offer telehealth service before the plan deductible is satisfied without impacting the eligibility of plan members to contribute to their HSAs.  An employer is not required to offer this provision and it only applies to plan years beginning on or before December 31, 2021.

Extension of 2019 HSA Contribution Deadline: The due date for HSA contributions for calendar year 2019 has been extended from April 15, 2020 to July 15, 2020.

Authority to Postpone Certain Deadlines: The U.S. Department of Labor (“DOL”) is given expanded authority to postpone the deadlines for employee benefit plan filings.  A single Form 5500 is filed each year which satisfies the information reporting requirements of both the DOL and the IRS.  While the DOL has not announced any extensions, the IRS has published Notice 2020-23 which extends certain filing deadlines (including the Form 5500) which occur on or after April 1, 2020 through July 14th until July 15, 2020.  Thus, the Form 5500 for a plan with a June 30th plan year end will have until July 15th to file (rather than April 15th (the normal January 31st deadline plus the 2 ½ month extension which must be applied for).  It is hoped that there also will be an automatic Form 5500 extension for calendar year plans. 

If you have any questions, feel free to call (919-781-4000), e-mail your Wyrick Robbins contact or Gray Hutchison( or San Parikh( of our Employee Benefits & Executive Compensation Practice Group.

NOTICE:  This Alert provides an overview and summary information regarding the relevant employee benefits provisions of the CARES Act and is not written advice directed at the particular facts and circumstances of any person or company.  Please note that not all potential details and nuances regarding these requirements and changes to law have been addressedand this Alert does not involve analysis of specific facts concerning any specific company or reach any conclusion regarding employee benefits issues for any specific individual or company.  If you are interested in the subject of this Alert, we encourage you to contact us or your legal counsel to discuss the potential application to your situation.