The CARES Act: Implications for Health and Welfare Benefits

ERISA and Employee Benefits Client Alert

The CARES Act: Implications for Health and Welfare Benefits

The $2 trillion Coronavirus Aid, Retirement, and Economic Security (CARES) Act contains a variety of provisions impacting employer-sponsored group health plans. The Act, as a part of the ongoing effort to help individuals impacted by the devastating COVID-19 epidemic, includes health and welfare measures largely designed to provide temporary relief from some of the restrictions that make it difficult for patients to gain access to virus testing and care. A brief summary of some of those measures is included below.

Expanded Coverage for COVID-19 Related Care

The Act expands COVID-19 related testing benefits beyond what was required by the Families First Coronavirus Response Act (FFRCA). The Act requires group health care plans to cover, not only FDA approved COVID-19 testing, but also testing that is pending FDA approval, testing for which the developer intends to apply for FDA approval within a reasonable time, and tests approved by the Department of Health and Human Services. This expanded testing coverage applies to private insurance plans and must be provided without any cost sharing measures, including copayments or deductibles, or prior authorization requirements.

In an effort to reduce “surprise billing,” the Act also sets a rate at which the insurer or group health plan provider must reimburse providers for COVID-19 testing. It provides that if the insurer negotiated a rate with the provider prior to the COVID-19 pandemic being declared, that negotiated rate must continue throughout the emergency. If there was no such negotiated rate, the plan must either pay the cash price for these tests, which providers are required by the Act to publish on their public websites, or negotiate a lower price.

This provision is effective immediately and is not retroactive. 

Recently, by way of Notice 2020-15, the Internal Revenue Service (IRS) has also permitted high-deductible health plans to cover both COVID-19 testing and treatment without any cost-sharing measures1.

Expedited Preventative Services

Under the Affordable Care Act (ACA), most preventative care services must be provided for free prior to the deductible being satisfied and with no cost-sharing. Accordingly, the process of adding new “preventative” services to the list of those covered under group health plans can take over a year after its initial recommendation. The CARES Act attempts to expedite that process for any “qualifying coronavirus preventative service.” These services include devices, services, or immunizations intended to prevent or mitigate COVID-19 and that receive either: (1) a rating of “A” or “B” from the U.S. Preventive Services Task Force (USPSTF) or (2) a recommendation from the Center for Disease Control’s Advisory Committee on Immunization Practices (ACIP). Though no preventative care currently exists for COVID-19, such services would need to be covered within 15 business days of receiving a qualifying USPSTF rating or ACIP recommendation.

Enhanced Access to Teleservices

Remote health care services offer additional flexibility and safety for patients seeking to avoid the exposure to the virus. The CARES Act allows for a temporary policy change whereby high-deductible health plans can cover telehealth and other remote care services before the plan’s deductible is satisfied. This is intended as a temporary safe harbor that would allow individuals to receive convenient medical care without venturing into crowded clinics or hospitals during the pandemic. Importantly, this permissive provision also allows for the coverage of telehealth care visits that are unrelated to COVID-19.

This change is effective immediately and applies to plans beginning on or before December 31, 2021.

Increased Flexibility for Using HSA, FSA, and HRA Funds

Finally, the CARES Act provides that menstrual care products can be considered “medical care” expenses reimbursable under Health Savings Accounts (HSAs), Health Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs). Similarly, the Act permits reimbursement for over-the-counter medical products without a prescription, eliminating the prior ACA rule against such reimbursements.

As these changes are discretionary, plan amendment will be required before these coverage expansions can be implemented. These coverage expansions only apply to HSA monies paid after December 31, 2019 and FSA/HRA expenses incurred after December 31, 2019.


It is important for health plan sponsors to stay aware of the most recent changes in the law as Congress continues to respond to the evolving challenges the COVID-19 pandemic presents. Subsequent COVID-19 legislation is likely to impact employee benefits plans including health and retirement plans. If you have an ERISA or employee benefits questions relating to the CARES Act or COVID-19, please feel free to contact a member of our ERISA and Employee Benefits practice group.


[1] For more information about IRS Notice 2020-15, please see our March 19, 2020 Alert at

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