July 11, 2013
The Department of Health and Human Services, Department of Labor and Department of U.S. Treasury (collectively, the "Agencies") recently published final rules regarding the requirement under the Patient Protection and Affordable Care Act ("Affordable Care Act") to cover certain contraceptive services.
The rules finalize the general approach described in previously issued rules with respect to providing an exemption for religious employers who oppose birth control due to religious beliefs. They do not differ substantially from proposed regulations issued earlier this year. In addition, the final rules establish accommodations for non-profit religious hospitals and colleges and certain other non-profit religious organizations that object to providing some or all contraceptive services coverage. These accommodations include establishing a process in which employees receive separate payments for contraceptive services directly from insurers (fully insured group health plans) or third-party administrators (self-insured group health plans).
The Affordable Care Act requires non-grandfathered group health plans to cover certain contraceptive services without cost-sharing. In general, under previous regulations, coverage must be provided for plan years beginning on or after August 1, 2012. In order to develop rules for certain non-profit religious affiliated organizations with objections to providing contraceptive coverage to comply with these requirements, these organizations were granted a temporary moratorium from complying with these rules until the first plan year beginning on or after August 1, 2013. Services required to be covered include all Food and Drug Administration ("FDA") approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity, to the extent prescribed by a health care provider. Religious employers, primarily houses of worship, may exclude contraceptive coverage from their health plans for their employees and their dependents.
"Religious employers" are fully exempt from the Affordable Care Act's requirement to provide contraceptive services and may exclude contraceptive coverage from their health plans for employees and their dependents. Under the final regulations, the definition of what constitutes a religious employer has been simplified and clarified to eliminate any question as to whether group health plans of houses of worship that also provide educational, charitable, or social services to their communities can qualify for the exemption. Specifically, a religious employer is defined as an employer that is organized and operates as a non-profit entity and is referred to in section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code. The requirements that religious organizations have the inculcation of religious values as its purpose, or that they have to primarily employ or serve persons who share their religious tenets, have been eliminated. Thus, for a religious employer to be exempt from the contraceptive services coverage requirement, it only has to be a nonprofit entity and be a house of worship, an integrated auxiliary of the church, or a convention or association of churches.
Certain nonprofit religious-affiliated organizations ("Eligible Organizations"), such as hospitals, colleges, and charities are not fully exempt from the federal requirement to cover contraceptive services. The final regulations set forth an accommodation so that an Eligible Organization does not have to contract, arrange, pay or refer for contraceptive coverage. However, coverage will still be separately provided to women enrolled in its health plans at no cost.
The final regulations adopt the same definition of an Eligible Organization as set forth in previously proposed regulations:
The following is a general description of how the accommodation process is intended to work:
The simplified definition of "religious employer" becomes effective beginning with plan years on or after August 1, 2013. An Eligible Organization has until its first plan year beginning on or after January 1, 2014 to comply.
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