Benefits and Compensation

Supreme Court Seeks New Accommodation in Birth Control Case

Religious non-profit employers that are not eligible for a church exemption seemed more likely to change the process of opting out of the Affordable Care Act requirement that health plans cover contraceptives and family planning services without cost-sharing.

In a two-page order dated March 29, the U.S. Supreme Court told lawyers arguing Zubik v. Burwell, No. 14-1418 (cert. granted Nov. 6, 2015), to file new briefs and responses on whether such employers could do no more than tell their insurer they were not providing contraceptive coverage. (Current rules require such companies to tell: (1) their insurer or third-party administrator or (2) the federal government, in an official document, but they also require involvement in assigning replacement coverage for the disputed benefit.)

In oral arguments on Zubik, the Supreme Court appeared ready to split 4-4 over whether the separate act of telling the government (including identifying an alternative payer for contraceptives) was a severe enough imposition on an employer’s religious sensibilities to trigger a violation of the Religious Freedom Restoration Act of 1993.

The Proposed Arrangement

In the order, the court asked to hear about the pros and cons of companies telling their insurers or TPAs that they do not want the health plan to include contraceptive coverage (presumably when they sign a contract for coverage). Employers would not provide any notice to an insurer, government entity or employees.

The insurer or TPA would notify employees of cost-free contraceptive opportunities, independent of their employers or the employers’ health plans. Companies would not have to file any paperwork with the government, nor would they have to identify a replacement insurer to provide the drugs and services.

The court asked the lawyers to file their briefs on or before April 12, with counter-briefs due April 20. The parties were invited to propose other arrangements that might be acceptable.

Background

Starting Jan.1, 2014, the government required religious nonprofits that object to providing contraceptives to complete an EBSA Form 700 in order to claim an exemption from the ACA’s contraceptive mandate. Then after objections that filing the form made employers complicit in arranging disputed coverage (and after a Supreme Court stay on government enforcement of the contraceptive mandate), the implementing agencies issued a new accommodation in 2015 stating that organizations can object by a letter.

Even under that accommodation, however, an employer would still be required to: (1) identify itself as an objecting entity; and (2) arrange for the disputed coverage.

Four High Court justices appeared likely to stand behind the religious employers to overturn the previous accommodation. At least one justice remarked that the filled-out forms arranging contraceptive coverage would become part of the employer’s ERISA plan document, in oral arguments on March 23.

The new order thus seemed aimed at relieving the non-profit institutions from any notice requirement, while ensuring that workers can get contraceptive coverage outside of the employer’s health plan.

For-Profits Also Had Success

For-profit employers also have had success in their religious challenges to the contraceptive mandate. The U.S. Supreme Court in Burwell v. Hobby Lobby, 134 S. Ct. 2751 (2014), ruled that a closely held for-profit company also could escape the birth-control requirement. The High Court found that such entities could be considered a “person” for purposes of the RFRA and the First Amendment. The Court then determined that under the RFRA, the ACA coverage requirements placed a substantial burden on these entities. Soon thereafter, in July 2015, the government defined the kind of “closely-held” entity that would be eligible for an exemption from the contraceptive mandate.

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