Last week the Agencies (DOL, HHS and IRS) issued final regulations concerning ACA’s preventive services mandate. This mandate requires non-grandfathered plans to cover specific preventive services, such as immunizations, mammograms, and autism screening, without cost-sharing when dispensed by an in-network provider. While numerous preventive services were covered under this mandate, it was contraceptives for women that got the most attention because of the Hobby Lobby decision. The proposed regulations after this decision expanded the exception that was originally intended for nonprofits to closely held for-profit employers allowing certain qualifying employers with religious objections to be exempt from the contraceptive mandate or engage in an accommodation process relieving them of the obligation.

Last week’s regulations which are applicable for plan years beginning on or after September 14, 2015, finalize the proposed regulations with a few modifications. Additionally, the final regulations incorporate FAQ guidance and make minor changes to the 2010 interim final regulations.

• The regulations expanded on the definition of closely held for-profit entity making it more flexible than tax law generally allows. In order to be considered a closely held for-profit entity, thus qualifying it for the exemption, an employer
  • must be for profit,
  • must not be publicly traded,
  • must have 50% of value of ownership interest owned by five or fewer individuals (or a substantially similar structure), and
  • object to providing contraceptive coverage because of owners’ religious beliefs.
• The final regulations formalize the FAQ guidance which provided that a plan must cover out-of-network preventive services without cost-sharing if the plan does not have an in-network provider who can provide a required preventive service.
• The final regulations also clarified that any service that constitutes a recommended preventive service on the first day of a plan year must be provided through the end of the plan year even if the recommendation changes. The final regulations do provide a few exceptions to this rule. Therefore a plan may drop the coverage prior to the end of the year:
  • for any service that is downgraded to a “D” rating by the appropriate entity,
  • is subject to a safety recall, or
  • is otherwise deemed by the applicable federal agency to pose a significant safety concern.