Two newly released final rules provide conscience protections to those who have a religious or moral objection to health insurance that covers contraceptive methods and/or sterilization procedures. Under the final rules, a covered plan sponsor, issuer or plan that properly claims an exemption will not be penalized for failing to include contraceptive coverage in the plan’s benefits. However, any entity may face fines and lawsuits for not complying with the contraceptive coverage mandate. As in the prior rules, both the religious and moral final rules extend the exemption (and the accommodation) to certain non-governmental employers (including for-profit companies, whether they are closely-held or not) and institutions of higher education with “sincerely held religious beliefs” or “sincerely held moral convictions” opposed to offering coverage of some or all contraceptive or sterilization methods. No new notice requirements are imposed, but the rules do note that existing ERISA rules governing group health plans would apply and “… therefore, if an objecting employer would like to exclude all or a subset of contraceptive services, it must ensure that the exclusion is clear in the plan document. Moreover, if there is a reduction in a covered service or benefit, the plan has to disclose that change to plan participants. Thus, where an exemption applies and all or a subset of contraceptive services are omitted from a plan’s coverage, otherwise applicable ERISA disclosures must reflect the omission of coverage in ERISA plans.”
Background Under the Affordable Care Act (ACA) and its implementing regulations, FDA-approved contraceptive methods, sterilization procedures, and related education and counseling are included in the list of preventive services that must be covered without cost sharing under non-grandfathered health plans. The Obama administration provided for a narrow exemption for churches, religious orders, and integrated auxiliaries (organizations with financial support primarily from churches), and there was an accommodation for religious non-profits. And after the Supreme Court’s Hobby Lobby decision, there was a further accommodation for closely held for-profit organizations that had religious objections to covering some or all contraceptives. Under the accommodation, the entity’s insurer or third party administrator was responsible for providing contraceptive services to the entity’s plan participants and beneficiaries.
The Trump administration inherited dozens of lawsuits filed by organizations with sincerely held religious or moral objections to paying for or providing contraceptive or abortion-inducing drugs and devices. In October 2017, two interim final rules were issued seeking public comment. See our Update. The rules protected conscientious objections to the federal contraceptive guidelines, while maintaining the contraceptive coverage requirement in nearly all cases. The administration received over 100,000 public comment submissions by the December 2017 deadline. In three lawsuits (currently on appeal) filed against the interim final rules, the government won one, while two judges enjoined enforcement of the interim final rules. In many cases filed against the contraceptive mandate promulgated by the previous administration, courts have granted permanent injunctions protecting non-profit organizations from the contraceptive mandate and accommodation.
Two Final Rules Concerning Religious and Moral Exemptions: Exemptions for Religious Beliefs – This rule provides an exemption from the contraceptive coverage mandate to entities and individuals that object to services covered by the mandate on the basis of sincerely held religious beliefs. Thus, entities that have sincerely held religious beliefs against providing contraceptive services (or services which they consider to be abortifacients) would be exempt from the mandate and no longer be required to provide such coverage. The rules maintain the availability of the accommodation, in which the entity’s insurer or third party administrator is responsible for providing contraceptive services to the entity’s plan participants and beneficiaries, but they make it voluntary, at the option of the entity. That is, an otherwise exempt entity can elect to take advantage of the accommodation, which would provide contraceptive coverage to its employees and their dependents. Entities that object to covering some, but not all, contraceptive items would be exempt with respect to only those methods to which they object. The exemption is also applicable to institutions of higher education, insurance issuers to the extent they provide a plan to otherwise exempt entities, and individuals whose employers and issuers are willing to provide them a plan compliant with the individuals’ beliefs. The final rule differs from the interim final rule in technical ways to ensure the text and operation of the rule is clear, and that insurers can rely on its procedures.
Exemptions for Moral Convictions – This rule gives nonprofit organizations, small businesses, and individuals that have non-religious moral convictions opposing services covered by the contraceptive mandate protections that are similar to the religious final rule’s protections for religious organizations and businesses. The exemptions apply to nonprofit organizations and to closely held businesses, as well as to institutions of education, health insurance issuers serving exempt entities, and individuals. The voluntary accommodation is also available to entities with moral convictions against providing contraceptive services (or services which they consider to be abortifacient) in their health plans. The moral exemption is not extended to publicly traded businesses or government entities. The final rule differs from the interim final rule in technical ways to ensure the text and operation of the rule is clear. Based on case law, the preamble to the rule explains that moral convictions are protected in ways similar to religious beliefs, when the convictions are those: (1) that a person “deeply and sincerely holds”; (2) “that are purely ethical or moral in source and content; (3) “but that nevertheless impose … a duty”; (4) and that “certainly occupy … a place parallel to that filled by … God’ in traditionally religious persons,” such that one could say the “beliefs function as a religion.”
Notices The expanded exemptions use the same approach as under the prior rules, under which exempt groups are not required to file notices. Therefore, self-certification is optional and employers who claim an exemption may voluntarily provide self-certification or notice to the government. However, if an entity improperly claims an exemption, it risks fines and lawsuits for not complying with the contraceptive coverage mandate. If an exempt group wishes to use the optional accommodation process, it may file the same kind of form or notice required under the previous accommodation process (forms are being updated in conjunction with the final rules).
Effective Date and Impact The rules will take effect on January 14, 2019. The rules leave in place contraceptive coverage guidelines where no religious or moral objection exists, and they do not change the Health Resources and Services Administration (HRSA) authority to decide whether to include contraceptives in the women’s preventive services guidelines for other entities.
The ACA itself exempts people who are in grandfathered coverage that existed prior to the ACA from the preventive services coverage mandate.
The rules leave in place government programs that provide free or subsidized contraceptive coverage to low income women, such as through community health centers.
The rules do not ban any drugs or devices, or prohibit any employer from covering contraceptives.
The rules exempt publicly traded religious entities if they object to contraceptive coverage.
The rules do not exempt publicly traded entities that have non-religious moral objections. The only entities known to express non-religious moral objections are pro-life organizations whose employees share the objections.
For most employers, these rules won’t be a cause for action as most employer plans cover contraceptives. Should you have questions about this or any aspect of healthcare reform, contact your Conner Strong & Buckelew account representative toll free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.