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Administration Issues Final Rule on Contraception Coverage
An accommodation for religiously affiliated nonprofits but no religious exemption for private employers

By Stephen Miller, CEBS  7/2/2013

updated July 30, 2013

On June 28, 2013, the Obama administration issued a final rule (published in the July 2 Federal Register) and accompanying fact sheet on implementing the Patient Protection and Affordable Care Act’s controversial mandate that employers provide women with coverage for recommended preventive care—including contraceptive services prescribed by a health care provider—with no cost-sharing.

The rule was issued by the Department of Labor's (DOL) Employee Benefits Security Administration (EBSA), the Internal Revenue Service and the Department of Health and Human Services (HHS).

Certain “religious employers,” primarily houses of worship, may exclude contraceptive coverage from their health plans for their employees and their dependents, and a limited accommodation is provided to certain religiously affiliated nonprofit organizations under the final rule. But it does not extend the religious exemption more broadly to private employers who claim that purchasing insurance that covers contraception would violate their religious beliefs.

“The health care law guarantees millions of women access to recommended preventive services at no cost,” said HHS Secretary Kathleen Sebelius, in a press statement. “Today’s announcement reinforces our commitment to respect the concerns of houses of worship and other nonprofit religious organizations that object to contraceptive coverage, while helping to ensure that women get the care they need, regardless of where they work.”

The final rule lays out the accommodation for “other nonprofit religious organizations,” such as nonprofit religious hospitals and institutions of higher education that object to contraceptive coverage. Under the accommodation, these organizations will not have to contract and pay for contraceptive coverage to which they object on religious grounds, but insurers must separately provide women enrolled in these health plans with contraceptive coverage no cost.

The approach taken in the final rules is similar to, but simpler than, that taken in the proposed rules, and responds to comments made by many stakeholders, according to an announcement by the Department of Health and Human Services.

With respect to an insured health plan, the nonprofit religious organization provides notice to its insurer that it objects to contraception coverage. The insurer then notifies enrollees in the health plan that it is providing them separate no-cost payments for contraceptive services for as long as they remain enrolled in the health plan.

Similarly, with respect to self-insured health plans, the nonprofit religious organization provides notice to its third-party administrator that it objects to contraception coverage. The third-party administrator then notifies enrollees in the health plans that it is providing or arranging separate no-cost payments for contraceptive services for them for as long as they remain enrolled in the health plan.

Nonprofit religious organizations must provide to their insurer or third-party administrator EBSA Form 700 (downloadable in MS-Word from the DOL's website), certifying that the organization qualifies for an accommodation.

Religiously affiliated nonprofits have until Jan. 1, 2014, to provide coverage of contraceptives, extended by the final rule from the previous deadline of Aug. 1.

The U.S. Conference of Catholic Bishops, a leading critic of the contraceptive mandate, had charged that the accommodation for religious nonprofits, when proposed, was insufficient.

In light of the final rule, on July 2 a group of national religious leaders, including Archbishop William E. Lori of Baltimore and Russell D. Moore of the Ethical and Religious Liberty Commission of the Southern Baptist Convention, released an open letter calling on HHS to "at a minimum, expand conscience protections under the mandate to cover any organization or individual that has religious or moral objections to covering, providing or enabling access to the mandated drugs and services."

The letter also asks Congress to take measures "to prevent future breaches of religious freedom."

Contraceptive Mandate Seems Headed to Supreme Court

The health care reform law's no-cost contraceptive coverage requirement has been challenged by over 60 lawsuits filed across the country by employers that object on religious grounds either to contraceptives generally or to specific contraceptives, notes Timothy Jost on the Health Affairs Blog. With one federal appellate court ruling in favor of the contraceptive mandate and one against, the issue is likely headed to the U.S. Supreme Court.

On June 27, 2013, the 10th U.S. Circuit Court of Appeals issued a temporary restraining order exempting Hobby Lobby, a family-owned business that operates more than 500 arts and crafts stores nationally, and Mardel, a Christian bookstore chain, from the mandate while its appeal from a lower court ruling is being adjudicated. The companies claimed that the regulation requiring that they cover post-fertilization contraceptives violated their rights under the Religious Freedom Restoration Act. The appellate court, ruling en blanc, held that the companies had "established a likelihood of success that their rights under this statute are substantially burdened by the contraceptive-coverage requirement, and have established an irreparable harm." On July 22, the district court entered an injunction barring the federal government from enforcing the contraceptive mandate against the companies.

But on July 26, a three judge panel of the 3rd U.S. Circuit Court of Appeals reached the opposite conclusion, ruling that Conestoga Wood Specialties Corp., a wood cabinet company with 950 employees, was not entitled to a preliminary injunction barring the regulation’s requirement that they cover all contraceptives. Conestoga objected only to contraceptives that operate post-fertilization. 

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related External Article:

Implementing Health Reform: Contraceptive Coverage Final Regulations, Health Affairs Blog, June 2013

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