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California Passes Law Requiring Health Insurers Cover Costs of COVID Tests

On Friday, October 8, Governor Newsom signed Senate Bill 510, which requires California health insurers and HMOs to cover the costs of COVID-19 tests and health care services related to the testing for COVID-19, with no cost-sharing. This law does not apply to self-funded plans.

Proponents of the law felt that this new state law was necessary because federal regulations on cost-sharing are unclear. Not all COVID tests are covered under the new law. Health insurers will only cover the total costs if the test is considered a “diagnostic test” or a “screening test.” Diagnostic tests include:

  • Testing intended to identify current and past infections performed when a person has signs or symptoms consistent with COVID-19
  • Testing asymptomatic persons with recent known or suspected exposure to COVID-19
  • Testing persons because of contact tracing efforts
  • Testing a person who claims to have exposure to someone with a confirmed or suspected case of COVID-19
  • Testing persons after an individualized clinical assessment by a licensed health care provider

Screening tests are meant to identify asymptomatic COVID-19 carriers who are unaware of exposure to COVID. Screening tests include:

  • Workers in a workplace setting
  • Students, faculty, and staff in a school setting
  • Persons before and after travel
  • Persons at home for those who do not have COVID-19 symptoms and do not have known exposure to someone with COVID. As of this writing, it is not known what the legislature intended with this provision. This piece will be updated if more guidance is issued.

Please note that this law prohibits member cost-sharing for services provided by out-of-network providers. It also prohibits the use of prior authorization of service or immunization intended to mitigate or prevent the spread of COVID-19. The law’s provisions don’t just apply going forward. Health insurers must cover these costs retroactively to March 4, 2020, the day the Governor initially declared the State of Emergency. More and more employers and schools are requiring regular COVID tests, and this new bill answers the question of who must bear the costs of those tests in the future.

The law also will apply to testing and related costs for future public health emergencies, as declared by the Governor of California. 

For additional guidance about California SB 510, talk to your OneDigital California consultant.