This past July, the U.S. Departments of Labor, Health and Human Services, and the Treasury released final regulations regarding health plan coverage of certain preventive services for women, including female sterilization and FDA-approved contraceptives (the “contraceptive mandate”). The regulations are generally effective for plan years beginning on or after January 1, 2014. The final regulations seek to ensure that non-grandfathered health plans and issuers provide women with access to contraceptive coverage without cost sharing. The regulations purport to accomplish this objective in a fashion that protects certain nonprofit religious organizations with religious objections to providing contraceptive coverage from having to contract, arrange, pay, or refer for such coverage.
The Religious Employer Exemption
Under the regulations, “religious employers” are not required to comply with the contraceptive mandate. Under the final regulation, a “religious employer” is a nonprofit entity that is referred to in Section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code. These sections of the code refer to churches; integrated auxiliaries, conventions, or associations of churches; and the exclusively religious activities of religious orders. This narrow definition would probably not include most church-related institutions (e.g., faith-based colleges, universities, or hospitals). However, the final regulations provide an accommodation for certain nonprofit entities that qualify as “eligible organizations.”
Accommodations for Eligible Organizations
As noted above, the final regulations establish accommodations for eligible organizations, such as faith-based colleges, universities, and hospitals, that meet a self-certification standard. These organizations can avoid contracting, arranging, paying for, or referring to contraceptive coverage if certain requirements are met, as more fully discussed below.
Definition of an Eligible Organization: An “eligible organization” is an organization that (1) opposes providing coverage for some or all of the contraceptive services required to be covered under the contraceptive mandate due to religious objections, (2) is organized and operates as a nonprofit entity, (3) holds itself out as a religious organization, and (4) self-certifies that it satisfies the first three criteria. The final rule makes no accommodation for secular or for-profit employers.
Self-Certification Generally: Each organization seeking to be treated as an eligible organization under the final regulations must self-certify prior to the beginning of the first plan year to which an accommodation is to apply. This means that eligible organizations that sponsor calendar year plans must satisfy the self-certification requirement by January 1, 2014. To be effective, a copy of the self-certification must be provided to the plan’s health insurance issuers or, if the plan is self-insured, the plan’s third-party administrators. An issuer or third-party administrator may not require any documentation from the organization beyond its self-certification as to its status as an eligible organization. Form 700, published by the Employee Benefits Security Administration, should be used for the self-certification.
Self-Certification for Insured Plans: If an eligible organization provides Form 700 to its health insurance plan, the health insurance issuer must exclude contraceptive coverage from the eligible organization’s group health coverage. Upon receipt of the certification, the health insurance issuer must:
- Expressly exclude contraceptive coverage from the eligible organization’s group health insurance coverage,
- Notify plan participants and beneficiaries, contemporaneous with but separate from a group health plan’s enrollment materials, that the issuer provides payments for contraceptive services at no cost separate from the group health plan for as long as the participant or beneficiary remains enrolled in the plan, and
- Provide payments for contraceptive services for plan participants and beneficiaries, separate from the group health plan, without the imposition of cost sharing, premium, fee, or other charge on plan participants or beneficiaries or on the eligible organization or its plan.
An eligible organization and its group health plan are considered to comply with the contraceptive coverage requirement even if the issuer fails to comply with the requirement to provide separate payments for contraceptive services for plan participants and beneficiaries at no cost.
Self-Insured Plans: An eligible organization is considered to comply with the contraceptive mandate if it provides a copy of its self-certification to all third-party administrators with which it or its plan has contracted.
The self-certification for a self-insured plan must state that the eligible organization will not act as the plan administrator or claims administrator with respect to contraceptive services or contribute to the funding of contraceptive services and must cite the relevant provision of ERISA regulations that explains the obligations of the third-party administrator with respect to the coverage.
Upon receipt of a copy of the self-certification, the third-party administrator has the right to decide not to enter into or remain in a contractual relationship with the eligible organization to provide administrative services for the plan.
If the third-party administrator agrees to enter into or remain in the contractual relationship with the eligible organization, the third-party administrator must then provide or arrange separate payments for contraceptive services without cost-sharing, premium, fee, or other charge to plan participants or their covered dependents or to the eligible organization or its plan. The third-party administrator must also provide plan participants and beneficiaries with notice of the availability of the separate payments for contraceptive services contemporaneous with (to the extent possible), but separate from, the group health plan’s enrollment materials.
Immediate Employer Action May Be Required
Religious employers that object to some or all of the services and drugs that are required to be covered under the contraceptive mandate should review their plan documents and insurance contracts to determine whether these services and drugs are covered and take action accordingly. Eligible organizations that have religious-based objections to this coverage will need to engage their insurance issuer (or third-party administrator) in a discussion of the self-certification procedure and provide a self-certification form (EBSA Form 700) to the health insurance issuer or third-party administrator (under a self-insured plan) as soon as reasonably possible, but not later than the first day of the 2014 plan year. EBSA Form 700 may be found here.