On June 30, 2014, the United States Supreme Court held, in a 5-4 decision, that the contraceptive mandate included under the Patient Protection and Affordable Care Act (“PPACA”) violates federal law. The Court’s holding in Burwell v. Hobby Lobby Stores, Inc., et. al., provides limited relief to closely-held companies whose owners have religious objections to the requirement to provide contraceptives, without cost-sharing, to female participants in their health plans.
Under PPACA, group health plans and health insurers are required to provide preventive health services without cost-sharing, including but not limited to, coverage for contraceptive care. A regulatory exception to the contraceptive mandate exists, however, for plans or policies maintained by certain religious employers and religious nonprofit organizations with religious objections to the mandate. No exception was provided under the regulations to for-profit companies that had similar objections.
It was this lack of regulatory relief that sparked a number of lawsuits around the country by several companies, including Hobby Lobby. In general, these companies claimed that the contraceptive mandate violated the Religious Freedom Restoration Act of ’93 (“RFRA”), which prohibits the government from substantially burdening a person’s exercise of religion even if the burden results from a rule of general applicability unless the government “demonstrates that application of the burden to that person is (a) in furtherance of a compelling governmental interest and (b) the least restrictive means of furthering that compelling governmental interest.” At the crux of the case, was the issue of whether a for-profit company constituted a “person” under the RFRA.
The majority concluded that the RFRA applied to for-profit closely-held companies. The Court warned, however, that the holding is limited to the contraceptive mandate and is not intended to be broadly applied to other provisions of PPACA that conflict with the religious beliefs of business owners. Further, it is applicable only to companies owned by a single family, and does not provide relief to public companies or companies with unrelated shareholders.
It is important to remember that the exemption from the contraceptive mandate is not automatic. A company that seeks to rely on this exemption is currently required to file a form with the government in order to claim the exemption. For female participants in an “exempt plan”, such coverage will be indirectly available through the insurer.