Health Care Reform: Contraceptive Coverage – Exemptions for Employers with Religious and Moral Objections
The Affordable Care Act (ACA) requires non-grandfathered group health plans and health insurance issuers to provide benefits for certain women’s preventive health services without imposing cost-sharing requirements. These preventive health services include all Food and Drug Administration (FDA)-approved contraceptive methods, sterilization procedures, and patient education and counseling, as prescribed by a health care provider for women with reproductive capacity.
Churches and other houses of worship are not required to comply with the ACA’s requirement to cover contraceptives. In addition, the Departments of Health and Human Services (HHS), Labor (DOL), and the Treasury (collectively, Departments) have exempted certain employers from the ACA’s requirement to cover contraceptives if they object to this coverage based on sincerely held religious beliefs or moral convictions. An optional accommodation process is available for employers who are eligible for an exemption. Under this process, the employer’s issuer or a third-party administrator (TPA), as applicable, will separately arrange for contraceptive coverage or payments to plan participants and beneficiaries.
LINKS AND RESOURCES
- Guidelines regarding the women’s preventive care requirements
- Final rule from 2018 providing an exemption for employers that have religious objections to providing contraceptive coverage
- Final rule from 2018 providing an exemption for employers that have moral objections to providing contraceptive coverage
Contraceptive Coverage Requirement
The ACA requires non-grandfathered health plans and health insurance issuers to cover certain preventive health services provided by in-network providers without imposing any cost-sharing requirements (such as deductibles, copayments, or coinsurance) for the services. The preventive health services that must be covered on a first-dollar basis are determined under various guidelines, including women’s preventive service guidelines supported by the Health Resources and Services Administration (HRSA).
The HRSA-supported preventive services guidelines require plans and issuers to provide coverage for the full range of FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling, as prescribed by a healthcare provider for women with reproductive capacity.
Failing to comply with the ACA’s contraceptive coverage mandate may trigger an excise tax of $100 per day with respect to each individual to whom the failure relates.
Exemptions to the ACA’s contraceptive coverage requirement are available to religious employers and eligible employers who object to providing this coverage based on their sincerely held religious beliefs or moral convictions. An optional accommodation approach is also available for employers who object to this coverage. The accommodation process allows an employer to avoid providing coverage for contraceptives under its health plan while requiring the employer’s issuer or TPA, as applicable, to separately provide or arrange for this coverage.
Legal Challenges and Accommodations
Looking back, there have been numerous legal challenges and exemptions to the ACA’s contraceptive coverage mandate based on employers’ religious objections to providing this coverage. The Departments first created a mandatory accommodation process for eligible nonprofit religious organizations that objected to providing contraceptive coverage on religious grounds but did not qualify for the church exemption described below. Under the accommodation approach, an employer follows a self-certification (or HHS notification) process to omit contraceptive coverage from its health plan, while the plan’s issuer or TPA, as applicable, provides or arranges for contraceptive coverage or payments for plan participants and beneficiaries.
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. Following the Supreme Court’s decision, the Departments expanded their mandatory accommodation process to include closely held for-profit entities with religious objections to the coverage.
The Departments’ accommodation process has also faced legal challenges that focus on whether the requirement to self-certify (or notify HHS) of an organization’s objections to contraceptive coverage infringes on religious liberty. To end the lawsuits, the Departments issued two final rules in 2018 to exempt more employers from the contraceptive coverage mandate and make the accommodation process optional.
Exemption for Churches
Group health plans of certain nonprofit religious employers (such as churches and other houses of worship) are exempt from the ACA’s contraceptive coverage requirement. Under this exemption, eligible employers offering health coverage may decide whether or not to cover contraceptive services, consistent with their beliefs. A “religious employer” is defined as a nonprofit entity that is referred to in Internal Revenue Code (Code) Section 6033(a)(3)(A)(i) or (iii). This definition primarily includes churches, other houses of worship, and their affiliated organizations.
Exemptions for Other Employers
On Nov. 7, 2018, the Departments issued the following two final rules to expand the number of employers who are eligible for an exemption from the ACA’s contraceptive coverage mandate:
- Objection based on religious beliefs: The first final rule provides a broad exemption for employers who object to providing contraceptive coverage based on their sincerely held religious beliefs.
- Objection based on moral convictions: The second final rule provides an exemption for certain employers who object to providing contraceptive coverage based on their sincerely held moral convictions (but not religious beliefs).
In addition, the final rules changed the accommodation approach for employers who are eligible for an exemption so that it is a voluntary option instead of a mandatory process. Under the accommodation process, employers can exclude contraceptive coverage from their health plans, while participants and beneficiaries receive contraceptive coverage or payments arranged by their issuers or TPAs.
New Proposed Rule: On Jan. 20, 2023, the Departments released a proposed rule to expand access to contraceptive coverage without cost sharing. The proposed rule would rescind the moral exemption to cover contraceptives but retain the existing religious exemption. The proposed rule would also establish a new way for individuals to access contraceptives at no cost when they are enrolled in plans that qualify for an exemption and do not use the optional accommodations process. Under the proposed rule, individuals would be able to obtain contraceptive services at no cost directly from a willing healthcare provider. At this time, the rules are only in the proposed form and have not been finalized.
Legal Challenges to the 2018 Final Rules
The 2018 final rules were intended to end the long-running litigation surrounding the ACA’s contraceptive mandate by extending the exemption to additional employers that object to the coverage and making the accommodation approach optional. However, the final rules sparked additional legal challenges that prevented them from taking effect as planned, pending the outcome of the lawsuits. On July 8, 2020, the U.S. Supreme Court upheld the final rules, allowing them to take effect.
The 2018 final rules exempt entities from providing an otherwise mandated contraceptive item to which they object based on their religious beliefs or moral conviction. Eligible entities include the following:
Exemption Based on Religious Objections
This exemption may apply to all types of nongovernmental employers that have sincerely held religious objections to providing contraceptive coverage, including:
- Churches, integrated church auxiliaries, conventions or associations of churches, or religious orders
- Nonprofit organizations
- For-profit entities (both privately held and publicly traded), regardless of whether they are closely held
- Institutions of higher education (in arranging student health coverage)
- Individuals with respect to their own coverage, where the plan sponsor and/or issuer (as applicable) is willing to offer them a plan omitting contraceptive coverage to which they object
- Health insurance issuers, to the extent they provide coverage to a plan sponsor or individual that is also exempt
- Any other nongovernmental employers
Exemption Based on Moral Objections
This exemption is narrower than the exemption based on religious objections. It only applies to the following types of nongovernmental employers that have sincerely held moral objections to providing contraceptive coverage:
- Nonprofit organizations
- Privately held for-profit entities
- Institutions of higher education (in arranging student health coverage)
- Health insurance issuers, with respect to plans that are otherwise also exempt under the rules
- Individuals with respect to their own coverage, where the plan sponsor and/or issuer (as applicable) is willing to offer them a plan omitting contraceptive coverage to which they object. Publicly held for-profit entities and nonfederal governmental employers, such as local government hospitals, are not eligible for this exemption.
Optional Accommodation Approach
The accommodation approach is an optional process for employers who qualify for an exemption to the contraceptive coverage mandate. Employers can choose to use the accommodation process so that contraceptive coverage is omitted from their health plan, but their issuer or TPA provides or arranges contraceptive coverage or payments for plan participants and beneficiaries.
How It Works
If an employer with a self-insured plan elects to use the optional accommodation process, its TPA will provide or arrange for contraceptive coverage. For employers with insured plans who elect to use the accommodation process, their issuers will provide contraceptive coverage. This coverage will be provided at no cost to the employer, and plan participants will receive the coverage without any premium or cost sharing.
Under the accommodation process, TPAs and issuers must provide plan participants and beneficiaries with a written notice that describes the availability of separate coverage or payments for contraceptives. This notice must be provided at the same time as any application materials distributed in connection with plan enrollment (or re-enrollment), but it must be separate from these plan materials.
Electing an Accommodation
To invoke the optional accommodation process, employers must use one of the following notification options.
- Self-certification Option: An employer can self-certify that it meets the exemption criteria and provide the self-certification to the plan’s issuer or TPA. The DOL provided a self-certification form for this purpose (EBSA Form 700).
- HHS Notification Option: An employer can notify HHS in writing of its objection to providing contraceptive coverage.
When an organization notifies HHS of its religious objection to providing contraceptive coverage, the notice must, at a minimum, include:
- The name of the eligible organization
- A statement that it objects to some or all contraceptive services (including an identification of the subset of contraceptive services to which coverage the eligible organization objects, if applicable) but would like to elect the optional accommodation process;
- The plan name and type;
- The name and contact information for any of the plan’s TPAs and issuers.
HHS has provided a model notice that eligible employers may but are not required to use.
Regardless of whether the eligible organization self-certifies or provides notice to HHS, the obligations of issuers and TPAs regarding providing or arranging for contraceptive coverage are the same.
Revoking an Accommodation
An employer may revoke its use of the accommodation process. However, an employer’s revocation cannot be effective before the first day of the first plan year that begins on or after 30 days after the date of the revocation. The issuer or TPA, as applicable, is required to promptly provide plan participants with written notice of the revocation.
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2013-2015, 2017-2018, 2021-2023 Zywave, Inc. All rights reserved.