In two interim final rules, both of which were issued and became effective on October 6, 2017, the Departments of Health and Human Services, Labor, and Treasury (collectively, the “Departments”) expanded the entities (and individuals) who may qualify as exempt from the contraceptive mandate under the Affordable Care Act (ACA). This new guidance is the latest in a long-line of regulatory and judicial actions taken regarding the requirement for group health plans to make contraceptive coverage available to participants with no cost-sharing.
Since the initial rulemaking on the contraceptive mandate, numerous organizations not qualifying as exempt (as defined by the Departments) have challenged the contraceptive mandate, including through protracted litigation. After a series of fits and starts, a final set of regulations attempting to “accommodate” objecting plan sponsors were issued – the most recent “accommodation” was only available to nonprofit entities and a limited set of closely held for-profit entities meeting certain conditions (which may include self-certification of eligibility).
In simple terms, the accommodation made available to “eligible organizations” (those nonprofits meeting the identified conditions) are/were not required to contract, arrange, pay, or refer a person for contraceptive services coverage. However, the objectionable contraceptive services are/were made available for women enrolled in the health plan of the organization (e.g., through the health insurance issuer or third-party administrator, as applicable), at no cost to the women or to the objecting organization.
While some organizations have been successful in asserting eligibility for an exemption, others did not qualify as exempt or were not eligible for an accommodation made available by the Departments despite their moral or religious objections to providing contraceptive coverage. Others argued that the accommodation was not an adequate remedy to overcome their objections and were, therefore, unwilling to avail themselves of that “accommodation.” The accommodation was subject to much criticism and, as recently as third quarter of 2016, additional information/comment was solicited seeking from the public concerning options for modifying the accommodation – and its protocol. The last FAQ issued on the topic indicated that a compromise (i.e., modification to the accommodation process that would still meet the goals of the policy) could not be reached.
How the New Interim Final May Affect Your Organization
The new interim final rules recognize exemptions for a wider group of entities. Under the expanded religious exemption, exempt entities include those entities that object to providing some or all contraceptive coverage based on “sincerely held religious beliefs.” For purposes of the religious exemption, entities that may qualify as exempt include nonprofit organizations, institutions of higher education, closely held for-profit entities, and for-profit entities that are not closely held, which may include some publicly traded entities with religious objections to contraceptive coverage.
Similarly, under a newly created “moral exemption,” entities may now be exempt from the contraceptive mandate if they object to providing coverage for some or all contraceptives based on “sincerely held moral convictions.” The moral exemption extends to nonprofit organizations, institutions of higher education, and non-publicly traded entities. At this time, the moral exemption does not extend to publicly traded entities.
An entity exercising its authority under the regulations may object to providing all or some contraceptive items. Where an entity has religious or moral objections to covering some, but not all, contraceptive items, that entity may be exempt from covering the objected to contraceptive items, but must provide coverage for the items it does not object to covering. Further, the regulations do not require the objectionable contraceptive services be made available through the health insurance issuer or third party administrator any longer. Objecting employers are reminded that a plan document must include a comprehensive summary of benefits covered by the plan. Employers looking to exclude all or a subset of contraceptive services under the religious or moral exemption must ensure that any exclusion is clear in the plan document (and, if applicable, underlying insurance documents), and must also ensure that plan participants (and beneficiaries) receive proper notice if the exclusion results in a reduction in a covered service or benefit. Any employer seeking to revoke its current use of an accommodation must issue advance written notice of the revocation to plan participants.
Comments will be accepted on the regulations until December 5, 2017. Absent modification in the future, employers, plan sponsors, issuers, and plans meeting the religious or moral exemption may rely on these new rules. In doing so, these entities will face no penalty for omitting contraceptive coverage and do not have to comply with the previously required self-certification process.