Private Health Insurance Improves Due to COVID-19, but More Work Needed

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Health insurance improves access to health care and financial security. We should all be able to see a doctor for regular checkups or to get treatment when we are sick. And no one should have to choose between getting health care for their child and paying their rent or buying groceries.

The most recent Census data show that nearly 15 million Texans (about 53 percent of all Texans) have private health insurance, either through a job or coverage they buy on their own. But even for Texans with health insurance, high deductibles and other out-of-pocket costs often discourage people from getting needed care. That creates challenges under regular circumstances, but can be especially dangerous during a pandemic. Efforts to control the spread of COVID-19 and reduce fatalities will be less effective if people do not seek testing or treatment for fear of cost.

How private health insurance covers COVID-19 testing and treatment varies because the patchwork of different coverage types are subject to different rules. The state of Texas oversees some health insurance plans, while Congress and the federal government oversees others. Congress, state agencies and insurance companies have been making improvements to coverage in the last few weeks in light of COVID-19, but public officials need to take additional action quickly. 

How private health insurance covers COVID-19 testing

Summary: Almost all Texans with health insurance have coverage for COVID-19 testing, when medical guidelines allow for testing, and will not be charged any out-of-pocket costs. This general rule does NOT apply to people with really “skimpy” insurance plans that offer limited coverage.

Background:Congress recently passed the Families First Coronavirus Response Act, which requires most types of health insurance to cover COVID testing with no out-of-pocket costs, like deductibles or copays. This includes both the test itself and the associated visit to the emergency room, urgent care center, or doctor’s office where a medical professional performed the test.

Gap: The new federal law does NOT apply to certain limited-benefit health coverage including short-term plans, fixed-indemnity plans, health-sharing ministries and direct primary care. 

  • On March 31, the Texas Department of Insurance (TDI) formally encouraged these limited-benefit plans to cover COVID-19 testing with no out-of-pocket costs, the same way traditional health insurers do. TDI also asked these plans to improve transparency about how they cover (or don’t cover) COVID-related care. TDI is updating its online list of insurers that are making no-cost testing available. As we posted this, it appeared that only one short-term plan insurer had voluntarily compiled, with a clear, publicly-posted policy outlining COVID-19 tests with no out-of-pocket costs. 
  • The Families First Act authorizes two new federal funding streams for states to cover the cost of COVID-19 testing for the uninsured, and in the Act, people in these limited-benefit plans are considered “uninsured.” As of April 6, 2020, Texas had not yet requested these available federal funds. 

Needed action: 

  • The Texas Governor/Health and Human Services Commission must opt into and quickly implement both new fully federally-funded testing options for the uninsured.
  • If limited-benefit plans – some of which are marketing “next-day coverage” to anxious shoppers – fail to voluntarily comply with the state’s request related to COVID testing and transparency of coverage, the Texas Department of Insurance should require that plans clearly notify members and shoppers of coverage, limits and exclusions for COVID-related care. They should also notify members of the availability of no-cost testing for the uninsured and people in skimpy plans, when Texas implements that option.
  • The Texas Attorney General should immediately drop his health care repeal lawsuit seeking to overturn the Affordable Care Act (Obamacare), which would result in 1.7 million Texans losing coverage, and with it access to COVID-testing and treatment. 

How private health insurance covers COVID-19 treatment

Summary: There are no new state or federal laws/guidance that require a plan to cover COVID treatment or make treatment available with no out-of-pocket costs, but several health insurance companies have voluntarily stepped up to do so. Whether treatment is covered and what you’ll have to pay out-of-pocket will depend on your specific plan. About 1 in 3 Texans with private health insurance will have firm state protections from COVID-related surprise medical bills, but the other 2-in-3 have limited protection from surprise bills related only to testing for COVID-19.

Background: Here are three key questions when considering coverage:

1. Are COVID-related treatments a covered benefit in your plan?

  • Most types of health insurance already cover benefits like emergency room visits, hospitalization, prescription drugs, etc., but benefits are generally subject to out-of-pocket costs like copays and deductibles. 
  • Gap: Some skimpy plans offered by employers or purchased directly by people may not cover hospitalization, prescription drugs, or other key benefits, leaving those people with insurance at risk of facing substantial medical bills.

2. Are the COVID-related covered treatments in your plan subject to out-of-pocket costs?

  • Your plan may cover COVID-related treatments, but you still may be unable to afford your out-of-pocket costs. The Kaiser Family Foundation estimates that the total cost of a COVID-related hospitalization (what the insurer pays together with your out-of-pocket costs) for those with employer-sponsored insurance ranges from $20,000 – $88,000. How much of that you’ll have to pay in out-of-pocket costs depends on the details of your plan and whether your insurer has waived these costs for COVID-19.
  • Out-of-pocket costs include your deductible, copays, and coinsurance. These costs often vary substantially for different covered benefits. For example, most plans have no out-of-pocket costs for preventive care, like vaccines, but other services, like hospitalization, may be subject to a very large, upfront deductible. All Affordable Care Act-compliant policies have an annual limit on total out-of-pocket costs of $8,150 for an individual and $16,300 for a family plan, to help protect against medical bankruptcy. After you hit your limit, your insurer covers ongoing costs in full for the rest of the year.
  • The following insurance companies have announced that they will waive out-of-pocket costs for COVID-19 treatment within certain timeframes and settings for people enrolled in their state-regulated plans: Aetna, Ambetter/Centene, Blue Cross Blue Shield of Texas, Cigna, FirstCare, Humana, Molina, Scott and White Health Plan, Sendero, and UnitedHealthcare. This list is growing quickly. Check America’s Health Insurance Plan’stracker for updates. (See below for an explanation of state-regulated plans)
  • Gap: Some skimpy plans offered by employers or purchased directly by people may cover hospitalization or other key benefits, but may only pay a capped amount per day, like $100/day when in the hospital. This leaves those people in these plans at risk of facing substantial medical bills.

3. Am I at risk for a surprise medical bill on top of my out-of-pocket costs? 

  • Many COVID-related medical visits could cause you to unknowingly get care from an out-of-network provider, which puts you at risk for a surprise medical bill. For example, your COVID-19 test could be sent to an out-of-network, private lab for analysis. Or you could go to an in-network emergency room, but be treated by an out-of-network ER doctor. 
  • Texas’ new law banning surprise bills (SB 1264) will protect the roughly 5.5 million Texans who have state-regulated health insurance, coverage for state employees through the Employees Retirement System of Texas, and coverage for school district employees through the Teacher Retirement System of Texas. The Texas Department of Insurance oversees state-regulated plans. About 1 in 3 Texans with private insurance have this coverage, including all plans sold on the Health Insurance Marketplace (HealthCare.gov) and much of the coverage for small employers with fewer than 50 employees. Check your insurance ID card. Cards from state-regulated plans have the letters “TDI” or “DOI” printed on them. See example ID cards here.
  • Gap: The other 2 in 3 Texans with private insurance have plans regulated at the federal level that are not subject to our protections in state law. Congress has still not acted to broadly ban surprise medical billing, but the just-passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a narrow provision intended to limit surprise medical bills from COVID-19 tests. The bill does not have surprise billing protections for any other COVID-related care, like ER visits or hospitalization. 

Needed action: 

  • Congress should act to extend its requirement that all private insurers and employer plans cover COVID-19 testing with no out-of-pocket costs to also include treatment. 
  • Congress should act to extend the new state option to use federal Medicaid funds to fully cover COVID-testing for the uninsured and people in skimpy plans to also include treatment.
  • Congress has been considering legislation to prohibit surprise medical billing for a year. It should act quickly to pass a broad bill that protects consumers, or at a minimum, a narrow fix focused on COVID-related surprise medical bills.
  • The Trump Administration should reverse course on a harmful decision and re-open Marketplace enrollment by creating a new, streamlined Special Enrollment Period, as leaders have done in previous disasters. Without this action, millions of people losing jobs or currently in skimpy plans will be locked out of comprehensive coverage until January 2021.

Remember, if you lose job-based insurance because of a layoff (or any other reason), you qualify today for a special enrollment period for Marketplace coverage. You can sign up from 60 days before you lose your job-based coverage to 60 days after you lose it. Go to www.HealthCare.gov to enroll. Free, local help with enrollment is available. 

But, if you lose your job and did NOT have job-based coverage, or you are still working and uninsured, you do NOT automatically qualify for a special enrollment period. Many lower-wage jobs in Texas do not come with the offer of health insurance, even for full-time employees, which is why the President must quickly change course.

Texas has taken additional steps to help private health insurance consumers in light of COVID-19

The Texas Department of Insurance has acted quickly to release a series of directives to better protect people with state-regulated health insurance during the COVID-19 outbreak. They are cataloged on TDI’s Coronavirus Updates webpage, along with FAQs for consumers and a list of insurance companies that have waived out-of-pocket costs for COIVD-19 tests. Key actions we applaud include:

  • Improving access to an early, 90-day refill on medications and other steps to improve access to prescription drugs;
  • Directing insurers to work with their members who are struggling to afford their premiums,including by offering grace periods, payment plans, or temporary suspension of premiums. Separately, the federal agency in charge of the Marketplace announced that insurers have additional flexibility to offer premium payment delays to help people with Marketplace subsidies maintain coverage;
  • Increasing access to telemedicine;
  • Encouraging limited-benefit plans to cover COVID-testing with no out-of-pocket costs and to improve transparency with their members about how they cover (or don’t) COVID-related care; and
  • Ensuring consumers in HMO and EPOs plans can access COVID-19 testing with no out-of-pocket costs, even if the services are delivered out-of-network and not on an emergency-basis.

Needed action: 

  • TDI has already formally encouraged insurers to waive requirements for prior authorization referrals, notification of hospital admission, and medical necessity reviews to facilitate care consistent with CDC guidance. If plans have not taken action in a consistent manner, TDI should require these changes.

See our earlier letter to Governor Abbott for a full list of state actions needed to increase access to COVID-19 testing and treatment for Texans, regardless of whether they have Medicaid, the Children’s Health Insurance Program (CHIP), private insurance, or are uninsured. 

Stay tuned for additional updates from CPPP.

Stacey Pogue joined the center in 2008. She focuses on health policy issues. Before coming to the center, she did health policy and research work with the Medicaid and CHIP Division of the Health and Human Services Commission and the Texas Department of Insurance. In 2010 and 2011, she was selected to serve as a funded Consumer Representative to the National Association of Insurance Commissioners (NAIC). Pogue earned a Bachelor of Science in Geography, summa cum laude, from Texas A&M University in 1997 and a Master of Public Affairs from the LBJ School of Public Affairs at The University of Texas at Austin in 2005.