New Contraceptive Care Rules After Hobby Lobby

New Contraceptive Care Rules After Hobby Lobby


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The Obama Administration published new regulations to address recent U.S. Supreme Court decisions concerning employers who religiously object to offering health coverage for contraceptives.

The new rules are meant to ensure that contraceptive services remain available for women while balancing eligible employers’ religious beliefs. There are two new sets of regulations. One is effective immediately and creates a new method for eligible non-profit employers to object to contraceptive care coverage. The other asks the public for comments on how to define a closely-held corporation that is eligible for a religious accommodation.

Interim Final Rules Effective Immediately

The first set of regulations is in response to an interim (temporary) injunction issued by the U.S. Supreme Court a few days after the Hobby Lobby decision. The regulations are for nonprofit organizations that consider themselves religious organizations.

Wheaton College, a Christian non-profit college in IL, requested the injunction because it objected to enabling contraceptive coverage through its health plan. The college had three concerns: 1) It did not want to offer “abortion causing” contraceptive coverage, 2) it did not want to contract with an insurer that offered such contraceptive coverage, and 3) it did not want to participate in a system where that type contraceptive coverage would be triggered by filling out a form or designating its insurer as its proxy.

Wheaton College’s case is winding its way through the 7th Circuit Court of Appeals but, in the meantime on July 3, 2014, the Supreme Court granted the injunction and said it was enough for a religious employer to simply write to the federal government that the organization meets the requirements for an exemption from the contraceptive coverage requirement.

The new regulations, effective August 27, 2014, address the Wheaton College injunction. If an employer that is self-insured or has a group health plan objects to filing out the government’s form, that organization can instead notify the U.S. Department of Health and Human Services. The notice must include: 1) the name of the organization, 2) the basis on which it qualifies for an accommodation, 3) its objection based on sincerely held religious beliefs to coverage of some or all contraceptive methods, 4) the plan name and type, and 5) the name and contact information of the plan’s third party administrators and health insurance providers. The notice can be sent by email or mail, but not by fax.

Employers with religious objections to contraceptive coverage should evaluate whether they are an eligible organization that can seek the accommodation that has been offered. They can also send in comments about these new regulations to the Department of Labor for sixty days from the effective date.

One observation about these new regulations is that it appears doubtful they truly address the objections about requiring contraceptive coverage. Wheaton College did not want to trigger or enable certain types of contraceptive coverage. Whether that coverage is triggered by filling out a form or sending a notice to the government, the employer will still play some part in contraceptive care being offered by an insurer.

If Wheaton College and similar employers truly want no part in the process, it is an entirely new problem. Remember that in Hobby Lobby the Supreme Court assumed that guaranteeing contraceptive care is a compelling government interest. However, the Court ruled in favor of the company because a middle ground was possible: the company did not need to offer contraceptive care benefits because the responsibility could be shifted to a health insurance company. Without notice that an accommodation is needed, the government cannot begin the process to shift the responsibility to a health insurer and it cannot ensure coverage for the company’s employees. Thus, there is a continued tension between each side’s goals and uncertainty on how the government can ensure contraceptive coverage while accommodating employers’ religious objections.

Defining A Closely-Held Corporation

The second set of regulations address the Hobby Lobby decision and its ruling that closely held for profit organizations can seek a religious exemption from the contraceptive coverage requirement. These are only proposed regulations, which may be revised or adopted as proposed after a comment and review period. The regulations propose two possible options for defining a closely held for-profit corporation and they may require procedural steps in order for a corporation to validly state a religious objection.

Under the first approach, a qualifying closely held corporation would be one that is not publicly traded and has a threshold number of shareholders or owners. The maximum number of shareholders or owners has yet to be determined. The number could range from a maximum of 10 to 100 owners.

Under the second approach, a qualifying closely held corporation would be one that is not publicly traded and where a defined fraction of ownership is concentrated in a limited and specified number of owners. As an example, more than 50 percent of the organization must be owned by five or less owners.

The final rule will likely include a requirement that corporate actions must be taken in a specific way in order to validly state a religious objection. This requirement will not look at the reasonableness or sincerity of the objection. Rather, the organization must follow procedural steps to voice the religious objection. The requirement may be tied to rules on how a corporation takes formal actions in the state where the entity is incorporated or organized. The final rule may also require documentation and disclosure that the procedural rules were followed.

Comments will be accepted by the Department of Health and Human Services until October 21, 2014.

Author: Attorney Nilesh P. Patel

 

 

Articles are for informational purposes only and are not intended to be legal advice or create an attorney-client relationship.

 

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