July 15, 2015
On July 10, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (collectively, the Departments) jointly released final regulations on the Affordable Care Act (ACA)’s women’s preventive care coverage requirement. In addition, the regulations clarify certain other ACA preventive service coverage requirements.
The new rules finalize with minor changes the interim final rules from 2010 for preventive services coverage and also finalize last August’s proposed rules to provide an accommodation for certain closely held for-profit entities with religious objections to providing coverage for some or all contraceptive services, taking into consideration the U.S. Supreme Court ruling in Burwell v. Hobby Lobby Stores, Inc., as well as an interim order issued by the Court in Wheaton College v. Burwell.
The final rules are effective beginning with the first day of the first plan or policy year on or after September 12, 2015.
Religious employers, such as 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 the accommodation approach set forth in July 2013 final rules, and confirmed in these final rules, “eligible organizations” would not be 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. An eligible organization is one that:
Regarding the self-certification requirement, the organization must provide a copy of the self-certification to the carrier (for fully insured health plans), or the TPA (for self-funded health plans). 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.
As a result of the Hobby Lobby decision, 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, 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:
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.
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, must 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.
The final regulations also include the following clarifications related to ACA’s preventive care coverage requirement:
Also, required coverage must be provided through the end of the plan year, even if the recommendation or guideline changes during the plan year. This rule does not apply if a recommendation or guideline is downgraded to a “D” rating or if any related item or service is subject to a safety recall or is otherwise determined to pose a significant safety concern by an authorized federal agency.
The final regulations can be found at https://www.federalregister.gov/articles/2015/07/14/2015-17076/coverage-of-certain-preventive-services-under-the-affordable-care-act.
The certification form for use by eligible religiously-affiliated organizations is available at http://cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/cms-10459-certification.pdf.
The complete list of recommendations and guidelines that are required to be covered under the final regulations can found at https://www.healthcare.gov/preventive-care-benefits.
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