Employee Covid-19 Tests—When Must Employers Pay?
employment, but others may wish to do so. Reasons include retaining unvaccinated workers,
complying with state workplace rules, or meeting collective bargaining obligations.
Providing such coverage, however, can create traps for the unwary. Creating the apparatus to pay
testing costs (outside of a group health plan) may create its own ERISA plan, including an “Employee
Assistance Plan.” Such plans may then require compliance with complex rules and regulations, some
of which may override state laws. Further, if not properly administered, on-site testing programs may
raise HIPAA and other privacy concerns.
Regardless of whether self-funded employers mandate testing, they should be on guard for excessive
testing fees. Fortunately for employers, the guidance caps liability for OTC tests at $12/test for eight
tests per month for each plan member, provided members can obtain tests from designated
pharmacies without any upfront cost.
But similar safeguards do not so clearly apply to tests taken under medical supervision. Although the
costs of such tests vary, industry surveys have shown that they average $130 to $150, with out-of-
network providers charging on average 33% more. A provision in the CARES Act requiring that health
plans pay an “amount that equals the cash price for such [testing] service as listed by the provider on
a public internet website” has, in the view of some industry observers, made health plans vulnerable
to price gouging and abuse.
In fact, relying on this CARES Act language, some out-of-network testing providers have brought
lawsuits seeking to recover amounts approaching $500 per test. If they win, self-funded employers
may ultimately be responsible for excessive testing fees. Even at market prices, unanticipated costs
for frequent testing may dent an employer’s health care budget.
For these reasons, self-funded employers should pay attention to the testing costs that their health
plans pay—especially if they require their unvaccinated employees to test.
In particular, employers should review the provisions of their health plans and state law, carefully
follow ERISA’s requirements, and coordinate with their service providers to ensure the proper
administration of Covid-19 testing claims.
This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the
publisher of Bloomberg Law and Bloomberg Tax, or its owners.
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