Final Rule Issued on ACA Contraceptive Coverage Exemptions
Posted on: July 14, 2015Categories: HR & ComplianceUnder the Affordable Care Act (ACA), non-grandfathered health plans must cover certain preventive health services for women, including contraceptives, without imposing cost-sharing requirements for the services.
On July 10, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) released final regulations on the ACA’s women’s preventive care coverage requirement.
These regulations:
- Finalize an accommodation for eligible nonprofit organizations and for-profit businesses with religious objections to providing contraceptive coverage, including related documentation standards.
- Clarify general rules on the coverage of preventive services generally.
The regulations are applicable on the first day of the first plan or policy year beginning on or after Sept. 12, 2015.
Accommodations for Religious Organizations
Churches and other houses of worship are exempt from the ACA’s requirement to cover contraceptives. Other church-affiliated institutions that object to providing contraceptive coverage on religious grounds, such as schools, charities, hospitals and universities, can be eligible for an accommodations approach.
Under these accommodations, eligible organizations are not directly involved with providing any contraceptive coverage to which they object on religious grounds. Payments for these contraceptive services will be provided by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.
To be eligible for the accommodation, an organization or employer must meet specific requirements and was required to self-certify that it met the criteria (HHS has provided a self-certification form for this purpose).
A number of organizations challenged the self-certification requirement, arguing that it infringes on religious liberty because it makes the nonprofit organization complicit in the provision of birth control.
In response to these challenges, the Departments previously provided an alternative way for an eligible organization to provide notification of its objection to covering contraceptives: by notifying HHS in writing of its religious objection to providing contraceptive coverage instead of providing the self-certification to the plan’s issuer or TPA. This option has been confirmed in the final regulations.
Accommodation for Closely Held For-profit Businesses
On June 30, 2014, in Burwell v. Hobby Lobby Stores, Inc. et al., the U.S. Supreme Court created a narrow exception to the contraceptive mandate for closely held for-profit businesses that object to providing coverage for certain types of contraceptives based on their sincerely held religious beliefs.
In light of the Supreme Court’s decision in the Hobby Lobby case, the final regulations amend the definition of an “eligible organization” for purposes of the accommodations approach described above to include a closely held for-profit entity that has a religious objection to providing coverage for some or all of the contraceptive services otherwise required to be covered.
Under the final regulations, a qualifying closely held for-profit entity will not be required to contract, arrange, pay or refer for contraceptive coverage. Instead, payments for contraceptive services provided to participants and beneficiaries in the eligible organization’s plan would be provided or arranged separately by an issuer or a TPA.
The final rules define a qualifying closely held for-profit entity based on an existing definition in the Internal Revenue Code. For this purpose, a “closely held for-profit entity” is an entity that:
- Is not a nonprofit entity;
- Has no publicly traded ownership interests; and
- Has more than 50 percent of the value of its ownership interest owned directly or indirectly by five or fewer individuals.
For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual. In addition, the rule provides that entities whose ownership structure is substantially similar to this definition can also qualify for the accommodation. An organization that is unsure about whether its ownership structure qualifies as “substantially similar” can seek guidance from HHS.
To be eligible for the accommodation, the for-profit entity’s highest governing body (such as its board of directors, board of trustees or owners, if managed directly by its owners) must adopt a resolution or similar action, under the organization’s applicable rules of governance and consistent with applicable state law, establishing that it objects to covering some or all of the contraceptive services on account of the owners’ sincerely held religious beliefs.
A qualifying closely held for-profit entity seeking the accommodation may use either of the two notification options available to qualifying nonprofit entities that seek the accommodation.
Disclosure of the Decision to Assert a Religious Objection to Contraceptive Services
A for-profit entity taking advantage of the accommodation must make its self-certification or notice of objection available for examination upon request by the first day of the plan year to which the accommodation applies. The self-certification or notice of objection must be maintained consistent with ERISA’s record retention requirements.
The final regulations do not establish any additional requirements to disclose the decision. The Departments believe that the current notice and disclosure standards for health plans provide individuals with an adequate opportunity to know that the employer has elected the accommodation for its group health plan and that they are entitled to separate payment for contraceptive services from another source without cost sharing.
The current standards require that, for each plan year to which the accommodation applies, a TPA that is required to provide or arrange payments for contraceptive services and a health insurance issuer required to provide payment for these services, provide to plan participants and beneficiaries written notice of the availability of separate payments for these services contemporaneous with (to the extent possible), but separate from, any application materials distributed in connection with enrollment or re-enrollment in health coverage.
Read more about the additional clarifications of coverage of recommended preventative services on Thursday’s blog.
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