Key Questions Left in the Wake of the Supreme Court's Hobby Lobby Decision

by McNees Wallace & Nurick LLC

On June 30, 2014, the U.S. Supreme Court held in Burwell v. Hobby Lobby Stores, Inc. et al., that the Affordable Care Act's "contraceptive mandate", as applied to "closely held corporations", violates the Religious Freedom Restoration Act (RFRA). Much has been written about the decision authored by Justice Alito and its impact on the rights of corporations. However, most employers are still seeking clarity in terms of how the decision impacts their group health plans.

May any company now choose not to provide free contraceptive coverage as part of their health plan? No. At this point, the contraceptive mandate remains in effect for all employer health plans, except those that are grandfathered or non-grandfathered plans offered by (a) religious employers (e.g. churches); (b) certain religious nonprofit organizations; or (c) in light of the Hobby Lobby decision, for-profit "closely held" corporations that object to the mandate on religious grounds. In his opinion, Justice Alito did not preclude the possibility that publicly traded corporations could also voice valid religious objections to the mandate; however, given the diverse interests among shareholders in public companies, he observed that such religious objections are unlikely.

What is a closely held corporation? A broadly used IRS definition of "closely held corporation" is one in which more than 50% of all outstanding shares are held directly or indirectly by five or fewer individuals. However, Justice Alito never references any particular definition of the term in his opinion. It is possible that he intended his decision to apply only to closely held corporations within the IRS definition; however, it is more likely that Justice Alito used the term in a broader sense to include corporations with more than five shareholders who are of like mind from a religious standpoint (e.g. family businesses in which more than five family members are shareholders). The agencies charged with enforcing the ACA will likely be tasked with discerning which companies are closely held as contemplated in the Hobby Lobby decision and which are not.

May a closely held corporation be exempted from providing any form of contraception in its health plan? The owners in the Hobby Lobby decision objected to only four of the twenty means of contraception that are covered under the mandate. The four drugs, known as abortifacients or "morning after pills", were objectionable to the employers because they may prevent an already fertilized egg from developing any further. Although the owners in Hobby Lobby limited their objections to abortifacients, Justice Alito's opinion clearly anticipates that other employers will have broader religious objections to contraception; his holding is directed at the "contraceptive mandate" in general and not limited to abortifacient drugs. For this reason, it is likely that some closely held corporations with sincere religious objections to contraceptives may be exempt from covering most or even all of the methods of contraception covered by the mandate.

How will the exemption for certain closely held corporations be administered? The ball is in HHS's court on this question. Justice Alito alluded to several ways that HHS might accommodate the religious beliefs of closely held corporations while maintaining access to free contraceptive coverage for affected employees. These include a government-paid benefit or an arrangement through which employees obtain the benefit directly through the employer's insurer (not through the employer's plan). It is likely that HHS will create a process through which closely held corporations will file an exemption application in which they disclose the basis and scope of their religious objection. Such processes already exist for certain employers with respect to other health care mandates such as mental health parity requirements.

Are there other liability risks associated with excluding contraceptive coverage? An often overlooked aspect of the debate over the contraception mandate is that the Equal Employment Opportunity Commission (EEOC) has, in the past, taken the position that an employer's exclusion of contraception from a group health plan may constitute unlawful discrimination under Title VII and the Pregnancy Discrimination Act. In a 2000 agency decision, the EEOC reasoned that any plan which covers preventive prescription drugs such as vaccinations and blood pressure medication must also cover the "full range of contraceptive choices" for women other than abortion. It will be interesting to see whether this analysis holds up in court in light of the Hobby Lobby decision. Until that question is resolved, employers who may be exempt from the contraception mandate under ACA may nevertheless face EEO challenges if they exclude coverage for contraception.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Written by:

McNees Wallace & Nurick LLC

McNees Wallace & Nurick LLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.