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Private insurers no longer waiving out-of-pocket costs for COVID-19 treatment, employer waivers may be expiring too

By Rebecca Mayo, J.D. and WK Editorial Staff

Testing and vaccination for COVID-19 must be provided at no cost to individuals, however there is no federal mandate requiring insurers to waive out-of-pocket treatment costs for COVID-19. Early in the pandemic, the majority of private health plans waived out-of-pocket costs for COVID-19 treatment, but a survey by the Kaiser Family Foundation (KFF) found that as vaccines have become more widely available, most private insurers have put an end to those waivers. As more waivers expire, more people hospitalized for COVID-19, the majority of which are unvaccinated, will likely receive significant medical bills for their treatment.

Early voluntary waivers. In the summer of 2020, the KFF found that 88 percent of people enrolled in fully-insured private health plans would have had their out-of-pocket costs waived if they were hospitalized with COVID-19. According to KFF, insurers were motivated by high profits, the Patient Protection and Affordable Care Act medical loss ratio rebate requirements, public health concerns about managing the pandemic, and concern over a federal mandate to cover COVID-19 treatment costs. However, by fall of 2020, the KFF found that several of those insurers were starting to phase out COVID-19 cost-sharing waivers.

Vaccine impact. According to the KFF, as vaccines become widely available to adults in the United States and health care utilization has rebounded more generally, health insurers may no longer face political or public relations pressure to continue waiving costs for COVID-19 treatment. The KFF found that the typical deductible in employer health plans is $1,644 and enrollees hospitalized with pneumonia, which requires a similar treatment to those hospitalized with COVID-19, paid an average of over $1,300 out-of-pocket. This cost could serve as an incentive for many to get vaccinated. Additionally, unvaccinated COVID-19 hospitalizations cost the U.S. health system $2.3 billion in June and July 2021.

Current waivers. The most recent survey by the KFF found that 72 percent of the two largest insurers in each state and DC are no longer waiving out-of-pocket costs for COVID-19 treatment. Almost half of these plans ended cost-sharing waivers by April 2021, around the time most states were opening vaccinations to all adults. Another 10 percent of plans are phasing out waivers by the end of October, while some others are set to expire by the end of 2021, with a few carrying in to 2022.

Employers’ waivers may have expired too. According to the KFF, many employers offering self-funded and fully insured health plans to their employees also reported waiving COVID-19 treatment cost sharing based on preliminary results from the 2021 KFF Employer Health Benefits Survey (for which 70 percent of the interviews were completed by mid to late April).

However, since the survey was conducted earlier this year (with data from January to July), many of the waivers may have already expired. Based on the preliminary results reported from that survey, 36 percent of firms (with 50 or more employees) reported that their largest plan waived cost sharing for COVID-19 treatment at that time. Larger firms (those with 1,000 or more workers) were more likely to waive COVID-19 treatment cost-sharing than smaller employers. The survey included both self-funded employers and those that bought fully insured coverage and found that the likelihood of both types of employers to offer COVID-19 cost sharing was similar.