New Guidance Enhances Flexibility for Covering OTC COVID-19 Tests

February 07, 2022

The US Departments of Labor, Health & Human Services, and Treasury issued new frequently asked questions on February 4, 2022, regarding coverage of over-the-counter, at-home COVID-19 tests at no cost sharing (i.e., deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements during the public health emergency. 

This month’s FAQs provide clarification on the FAQs the three departments issued in January regarding coverage of over-the-counter (OTC) COVID-19 tests. (Refer to our prior LawFlash for a summary of the January FAQs.) The February FAQs offer group health plans and insurers greater flexibility in how they deliver the OTC COVID-19 tests while still complying with the requirements provided in the January FAQs, and attempt to address additional questions from stakeholders.

The new FAQs provide:

  • Additional flexibility under the safe harbor. The January FAQs established a direct-to-consumer shipping program and direct coverage safe harbor that, if complied with, gives group health plans and insurers the ability to limit reimbursement of OTC COVID-19 tests purchased from nonpreferred pharmacies or other retailers to the lesser of $12 per test or the actual cost of the test, as long as participants have adequate access to such direct coverage based on the relevant facts and circumstances. While still a facts-and-circumstances analysis, the February FAQs now provide greater flexibility in establishing the direct-to-consumer shipping program and direct coverage safe harbor, specifically:
    • Adequate access through a direct coverage program will generally require that OTC COVID-19 tests be made available through at least one direct-to-consumer shipping mechanism and at least one in-person mechanism.
    • Direct coverage may be provided in different ways, including, but not limited to, a direct-to-consumer shipping program that allows for orders to be placed online or by telephone, the pharmacy network, other non-pharmacy retailers, or other alternative OTC COVID-19 test distribution sites established by the plan or insurer (such as standalone drive-through or walk-up distribution sites).
    • In order to facilitate a seamless participant experience, plans and insurers should ensure that participants are aware of key information needed to access OTC COVID-19 tests (including which tests are available under the direct coverage program and how to obtain the tests).
    • A direct-to-consumer shipping program does not have to provide exclusive access through one entity, as long as it allows participants to place an order for OTC COVID-19 tests to be shipped to them directly. For example, if a plan or insurer has opted to provide direct in-person coverage of OTC COVID-19 tests through specified retailers, and those retailers maintain online platforms where individuals can also order tests to be delivered to them, the departments will consider the plan or insurer to have provided a direct-to-consumer shipping program. Note that plans and insurers must also cover reasonable shipping costs related to covered OTC COVID-19 tests in a manner consistent with other items or products provided by the plan or insurer via mail order.
    • Adequate access under the safe harbor does not require a plan or insurer to make all US Food and Drug Administration (FDA)-approved OTC COVID-19 tests available to participants through the direct coverage program. The plan or insurer may limit the direct coverage program to those entities with whom the plan or insurer has a contractual relationship or from whom the plan or insurer has been able to obtain OTC COVID-19 tests directly. Note that while plans and insurers can limit the brand of test through the direct coverage program, it still must reimburse all FDA-approved tests outside of the direct coverage program that meet the requirements of the relevant guidance.
    • The departments will not consider a plan or insurer to be out of compliance with the safe harbor if it has established a compliant direct-coverage program but is temporarily unable to provide adequate access due to supply shortage and, therefore, reimbursement for OTC COVID-19 tests can still be limited to $12 during such shortage.
  • Fraud and abuse. Plans and insurers are permitted to take reasonable steps to prevent, detect, and address fraud and abuse, including disallowing reimbursements for tests that are purchased from a private individual or online person-to-person sale, or from a seller that uses an online auction or resale marketplace.
  • Covered OTC COVID-19 tests. The OTC COVID-19 test coverage mandate applies to tests that are approved, cleared, or authorized for use by the FDA that can be obtained without a prescription and processed without the involvement of laboratory or other healthcare provider. Tests that cannot be self-administered and self-read without the involvement of a healthcare provider are not subject to the OTC COVID-19 test coverage mandate but may still be covered in accordance with earlier department guidance.
  • Impact on account-based plans. The cost or portion of a cost of an OTC COVID-19 test paid or reimbursed by a plan or insurer cannot also be reimbursed by a health flexible spending arrangement (FSA) or other account-based plan, such as a health reimbursement arrangement (HRA) or health savings account (HSA).

While we are all hopeful that the period of public health emergency is coming to a close in the near future, for the time being plans and insurers can now move forward in implementing a direct coverage program that can be more flexible in its delivery of OTC COVID-19 tests. Plans and insurers also have clarity and are armed with greater control to prevent fraud and abuse practices, which will limit financial exposure for reimbursing OTC COVID-19 tests purchased through online person-to-person sale or from a seller that uses an online auction or resale marketplace.


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If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

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Lindsay M. Goodman

New York
Craig A. Bitman

Robert L. Abramowitz
Amy Pocino Kelly

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R. Randall Tracht

Washington, DC
Althea R. Day
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