Feds Loosen Contraceptive Coverage Rules in Response to Religious Objections

To further accommodate religious organizations outraged over a health care reform requirement mandating the coverage of contraceptive care, three federal agencies — Treasury, Labor and Health and Human Services — jointly issued final regulations Feb. 1 that would exempt more group health plans and policies established or maintained by certain religious organizations from the requirement, and expand the type of eligible organizations that can be provided with accommodations under the law.

Background

Generally, the Patient Protection and Affordable Care Act requires that non-grandfathered group health plans and policies provide certain preventive health services without cost sharing, to include contraceptive coverage. Many religious entities objected strenuously to this requirement, and several lawsuits challenging its enforcement are pending. A series of rules were promulgated and a temporary enforcement safe harbor was established for certain nonprofit organizations with religious objections.

As evidence of the level of controversy, the agencies received approximately 200,000 comments on earlier proposed rules. One key concern was whether the definition of religious employer was too narrow. Currently, a religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a nonprofit organization. Another concern was the adequacy of the accommodations made for religious organizations.

Proposed Changes

The proposed rules would make two principal changes to take into account religious objections of eligible organizations:

Amend the criteria for the religious employer exemption to ensure that an otherwise exempt employer plan is not disqualified because its purposes extend beyond the inculcation of religious values or it serves or hires people of different religious faiths. “By eliminating the first three prongs of the current definition, there no longer would be any question as to whether group health plans of houses of worship that provide educational, charitable, or social services to their communities qualify for the exemption,” according to the agencies. It also would “avoid any inquiry into an employer’s purposes, as well as any inquiry into the religious beliefs of its employees and the religious beliefs of those it serves.”

Establish accommodations for health coverage established or maintained by eligible organizations, or arranged by eligible organizations that are religious institutions of higher education, with religious objections to contraceptive coverage. Each organization seeking accommodation would be required to self-certify that it meets the definition of eligible organization.

Separate Contraceptive Coverage for Plan Participants and Beneficiaries

In order to provide women with contraceptive coverage without cost sharing and protect eligible organizations that object on religious grounds, the agencies are proposing different rules for insured and self-insured plans. The insurer for insured group health plans of eligible organizations would have “sole” responsibility to provide the coverage. The agencies are considering alternative approaches for self-insured plans:

1.  A third-party administrator receiving the copy of the self-certification would have an economic incentive to voluntarily arrange for separate individual policies — it would be automatically compensated for arranging for coverage through an insurer. Here, the TPA would be acting as an agent of the plan — not a TPA.
2. The TPA would automatically arrange for an insurer to assume sole responsibility for providing the separate individual policies. The insurer would pay any of the TPA’s reasonable administrative costs.
3. The TPA receiving the copy of the self-certification would be directly responsible for automatically arranging for coverage. In this case, the TPA would become the plan administrator “solely for the purpose of fulfilling the requirement that the plan provide contraceptive coverage without cost sharing.” As such, this raises legal implications under ERISA’s reporting, disclosure, claims processing and fiduciary provisions for both the TPA and the eligible organization, the agencies noted.

Under all approaches, the insurer providing the individual policies would be able to offset its costs by claiming an adjustment in federally facilitated exchange user fees.

More details on this issue can be found in http://hrcomplianceexpert.com.