Last week, federal regulators released a Proposed Rule outlining accommodations for religious employers that object to the Affordable Care Act’s contraception coverage mandate. The Proposed Rule expands the range of employers that qualify for the existing religious exemption and outlines promised accommodations for other religious employers.
Expansion of Existing Exemption
The Affordable Care Act requires that health insurance issuers and group health plans provide coverage for certain women’s preventive services. In August, 2011, the Administration released guidelines that mandate coverage for all FDA-approved contraceptives.
Existing regulations published in August 2011 exempt a narrow group of religious employers from the contraception coverage requirement. To qualify for this exemption, a religious employer must:
have the inculcation of religious values as its purpose;
primarily employ persons who share its religious tenets;
primarily serve persons who share its religious tenets; and
be a non-profit organization under Section 6033(a)(1) and Section 6033(a)(3)(A)(i) or (a)(3)(A)(iii) of the Internal Revenue Code.
A number of commenters complained that this exemption was too narrow. In response, the Proposed Rule eliminates the first three requirements and, instead, requires only that an organization be a non-profit organization described in Section 6033(a)(3)(A)(i) or (a)(3)(A)(iii) of the Internal Revenue Code. The Preamble to the Proposed Rule states that this requirement is sufficient to limit the exemption “primarily to group health plans established or maintained by churches, synagogues, mosques, and other houses of worship, and religious orders,” and avoids unnecessarily questioning the educational, charitable, or social service activities of the church.
Accommodations for Other Religious Employers
While the Proposed Rule broadens the range of employers who qualify for the religious exemption, there are still a number of religiously-affiliated institutions (such as non-profit schools and hospitals) that have objected to the coverage requirement but do not qualify for the religious employer exemption. In early 2012, regulators promised to develop an accommodation for such employers and the Proposed Rule describes the parameters of this accommodation.
For fully-insured group health plans, the Proposed Rule requires the health insurance issuer to provide separate contraception coverage to all plan participants and beneficiaries, without cost sharing, premium, or other charge. The employer would not be directly involved in providing or paying for the contraception coverage. The Proposed Rule states that this structure generally will be cost-neutral or may even provide cost-savings to insurers through improvements in women’s health and a reduction in the number of childbirths.
For self-insured plans, the Proposed Rule allows a plan’s third-party administrator to arrange for a health insurance issuer to provide separate contraception coverage to plan enrollees at no additional cost. The cost of providing this coverage would be offset by reductions in the issuer’s user fees for participation in a federally facilitated exchange.
Potential Implications of Proposed Rule
While the Proposed Rule does address some concerns raised by religious employers, it falls short of what many opponents of the mandate have demanded. For example, the Proposed Rule does not provide an accommodation for for-profit entities that object to the contraception mandate. Additionally, the Proposed Rule does not address concerns that the accommodation for other religious employers still leaves the employer, for all practical purposes, in the position of facilitating the provision of contraception. It is likely, therefore, that opposition to the contraception coverage mandate will continue.
The release of the Proposed Rule may serve as a catalyst for litigation regarding the contraception coverage mandate. Until now, many non-profit employers have struggled to establish standing to challenge the mandate because they have been unable to demonstrate the “concrete and imminent injury” necessary to bring suit. While plaintiffs may still struggle to show that they are injured, the release of Proposed Regulations may strengthen their position that any potential injury is “concrete and imminent.” In addition, the Administration’s decision not to extend the religious employer accommodations to for-profit entities ensures that suits brought by such groups will continue to go forward.