Who Pays for COVID-19 Testing?

​When do health plans or employers have to pay for COVID-19 testing? The answer depends on who orders the test.

Health plans are required to cover most COVID-19 testing without cost-sharing—such as deductibles, co-pays and co-insurance—when testing is ordered by a medical provider for diagnostic purposes.

The provider must make an individual clinical assessment that the test is medically appropriate in accordance with accepted standards of medical practice, said Katrina McCann, an attorney with Proskauer in New York City. The provider, following U.S. Centers for Disease Control and Prevention (CDC) guidelines, may make this type of assessment for symptomatic individuals or for asymptomatic individuals with known or suspected exposure to the virus.

Employers and employees may disagree about whether tests are medically necessary, she said.

"Federal law does not require health plans to cover tests if the reason for testing is not an individualized diagnosis or treatment," she added. For example, return-to-work screenings would not have to be paid by an employee's health plan.

Any Separate Obligation by the Employer?

"Whether the employer separately has an obligation to pay for all or some portion of the cost of the test will turn on state or local law," said Christine Keller, an attorney with Groom Law Group in Washington, D.C. "In the absence of a specific rule pertaining to COVID-19 testing, the employer's practices regarding payment for mandatory drug tests may be a useful guide."

Nonetheless, even if employees are not covered by an insurance plan, Americans with Disabilities Act (ADA) guidance that predates the pandemic suggests that employers may be obligated to pay the costs of administering mandated COVID-19 tests in certain circumstances, according to Kate Gold, an attorney with Proskauer in Los Angeles.

The Equal Employment Opportunity Commission's Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the ADA states that if an employer requires an employee it reasonably believes will pose a "direct threat" to the health and safety of themselves or others to be examined by a health care professional of the employer's choice, then the employer must pay all costs associated with the visit.

In a pandemic, certain employees, such as those reporting to work in an area with a high rate of infection, may pose a direct threat. "Employers could therefore be required to pay for administering employer-mandated COVID-19 tests," she said.

In addition, certain states—like California—require reimbursement of necessary business-incurred expenses. "In states with such requirements, the cost of mandated COVID-19 tests, as well as reimbursement for mileage to and from the testing sites, could also be required," she added.

Moreover, travel time and test-taking time might also be compensable under the Fair Labor Standards Act, Gold added, and if such time is not compensable under federal law, it may be under state law.

Morale Considerations

Even when health plans and employers are not required to pay for COVID-19 testing, employers might consider paying the costs.

"I haven't heard of any employer requiring employees to pay for testing," said Steve Wojcik, vice president, public policy with Business Group on Health in Washington, D.C.

"Passing these costs along to employees, even if legally permitted, may have a detrimental impact on morale," Keller said.

Some employers in the entertainment industry are covering the cost of testing because they are requiring it as a condition to return to work from furloughs or to ensure onsite safety, Gold said.

"The day-to-day work in the production industry makes remote work infeasible for many employees, and social distancing and mask wearing of limited application, such as during actual filming," she said. "From both a legal and morale standpoint, employers should consider covering these costs or providing the testing where the testing is not otherwise covered by insurance."

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Cost Concerns

COVID-19 tests have remained "scarce and expensive," so few employers are testing their employees, said Jeff Levin-Scherz, M.D., North American co-leader, health management practice, at Willis Towers Watson in Boston.

"That will hopefully change in the coming weeks and months" as tests improve and become more widely available and cheaper. "When more employers are requiring testing, I expect they will plan to pay for this outside of the group health plan and not charge employees."

For now, most employers and insurance companies requiring testing are "voluntarily covering certain costs not required to be covered," said Chris Condeluci, an attorney with CC Law & Policy in Washington, D.C. But there are limits, he added. Self-insured employers, in particular, must keep an eye on costs, he said.

Approximately 63 percent of U.S. workers who receive health insurance from employers are in self-insured plans, according to Levin-Scherz.

When an employer has a self-insured group health plan, the employer pays claims for medical services from employees' contributions and the employer's general assets, said Antoinette Pilzner, an attorney with McDonald Hopkins in Bloomfield Hills, Mich.

Most self-insured employers are not small. Usually, an employer will have a minimum of 250 to 300 employees in its plan to balance the risk of large claims against the benefit of self-insuring, she said. The benefit "is largely not having to pay an insurance company a 'reserve' against claims in excess of premiums."

Pilzner said she's seen smaller employers—companies with 100 or fewer employees—start to self-insure their health care plans.

"Most self-insured employers also carry 'stop-loss insurance,' which insures the employer against having to pay for claims in excess of a specified amount per covered individual—called 'specific stop-loss'—or in excess of a specified amount for the entire plan, called 'aggregate stop-loss,' " she said. "Some employers have both types of stop-loss insurance."

Despite cost concerns, many employers are saying they will look out for employees and pay for COVID-19 tests, even when they aren't required to, Condeluci said.