Effective for plan years beginning on or after Aug. 1, 2012, the Affordable Care Act (ACA) requires non-grandfathered health plans to cover certain preventive health services for women, including contraceptives, without charging a copayment, a deductible or coinsurance.
Churches are exempt from covering contraception on the basis of their religious objections. However, this exemption does not cover other church-affiliated institutions, such as schools, charities, hospitals and universities, which are subject to a delay and special rules.
On Feb. 1, 2013, the Departments of Health and Human Services, Labor and the Treasury (Departments) issued a proposed rule that would exempt additional religious employers from the requirement to cover contraceptive services. However, the proposal contains provisions guaranteeing contraceptive coverage for their employees.
On Aug. 1, 2011, HHS issued additional preventive care guidelines for women. These guidelines require non-grandfathered health plans to include coverage for women’s preventive health services without cost-sharing for plan years beginning on or after Aug. 1, 2012 (Jan. 1, 2013, for calendar year plans).
In 2012, HHS amended the guidelines to allow certain nonprofit religious employers offering health coverage, such as churches, to decide whether to cover contraceptive services, consistent with their beliefs. A nonprofit religious employer was defined as an employer that:
- Has the inculcation of religious values as its purpose;
- Primarily employs persons who share its religious beliefs; and
- Primarily serves persons who share its religious beliefs.
HHS also provided a temporary safe harbor allowing nonprofit employers that do not currently provide contraceptive coverage to their employees because of religious beliefs to delay covering contraceptive services until the first plan year beginning on or after Aug. 1, 2013 (Jan. 1, 2014, for calendar year plans). This extension covers church-affiliated organizations that do not qualify for the exception for nonprofit religious employers, such schools, hospitals, charities and universities.
In early 2012, the Departments issued an advance notice of proposed rulemaking, which described draft proposals and sought input on the contraceptive coverage requirement for religious employers. This proposal would not require religious organizations, such as schools, charities, hospitals and universities, to provide contraceptive coverage, refer their employees to organizations that provide contraception or subsidize the cost of contraception. However, contraceptive coverage would be provided to female employees by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.
Proposed Exemption for Religious Employers
The proposed rule would simplify the definition of a “religious employer” as it relates to contraceptive coverage. Specifically, the proposed rule would eliminate the criteria that a religious employer have the inculcation of religious values as its purpose, primarily employ persons who share its religious tenets and primarily serve persons who share its religious tenets.
According to HHS, this simplified definition would primarily include churches, other houses of worship and their affiliated organizations. It is intended to clarify that a house of worship would not be excluded from the exemption because, for example, it provides charitable social services to persons of different religious faiths or employs persons of different religious faiths. HHS believes that the proposal would not expand the universe of employer plans that would qualify for the exemption beyond that which was intended in the 2012 final rules.
Creating Accommodations for NonProfit Religious Organizations
The proposed rule outlines accommodations for additional nonprofit religious organizations, while also separately providing enrollees contraceptive coverage with no copays.
An organization eligible for the exemption is one that:
- Opposes providing coverage for some or all of any contraceptive services which are required to be covered, on account of religious objections;
- Is organized and operates as a nonprofit entity;
- Holds itself out as a religious organization; and
- Self-certifies that it meets these criteria and specifies the contraceptive services for which it objects to providing coverage.
Under the proposed accommodations, the eligible organizations would not have to contract, arrange, pay or refer for any contraceptive coverage to which they object on religious grounds.
CONTRACEPTIVE COVERAGE FOR PLAN PARTICIPANTS
Under the proposed accommodations, plan participants would receive contraceptive coverage through separate individual health insurance policies, without cost sharing or additional premiums. The issuer would be required to ensure a seamless process for plan participants to receive contraceptive coverage.
For insured group health plans, the religious organization would provide the self-certification to the health insurance issuer, which would be required to automatically provide separate, individual market contraceptive coverage at no cost for plan participants. The Departments have stated that issuers generally would find that providing such contraceptive coverage is cost neutral because they would be insuring the same set of individuals under both policies and would experience lower costs from improvements in women’s health and fewer childbirths.
For self-insured group health plans, the religious organization would notify its TPA, which would be required to automatically work with a health insurance issuer to provide separate, individual health insurance policies at no cost for participants. The costs of both the health insurance issuer and TPA would be offset by adjustments in Federally facilitated Exchange user fees that insurers pay.
The Departments also proposed rules for religious nonprofit organizations that are institutions of higher education. If this type of organization arranges for student health insurance coverage, it is eligible for an accommodation comparable to the type available for a religious organization with an insured group health plan.
Some religious groups have objected to the proposal because it does not provide a full exemption for these organizations. They will continue to seek relief through the courts, unless a further compromise can be reached.