The Departments of Health and Human ServicesLabor and Treasury (the “Agencies”) recently issued the latest set of final regulations that purport to provide an accommodation for certain entities with religious objections to the ACA’s requirement that non-grandfathered group health plans provide contraceptive services.  The regulations, which were published in the Federal Register on July 14, 2015, finalize the interim final regulations published on August 27, 2014.   The regulations provide an alternative procedure for a so-called “eligible organization” to give notice of its objection to some or all contraceptive coverage and add a definition of “closely-held for profit entity” to the definition of eligible organization.

Alternative Notice Procedure.

In the wake of the U.S. Supreme Court’s order in Wheaton College v. Burwell, that indicated that written notice of  religious objection to certain contraceptive services would be sufficient for an organization to avail itself of the accommodation, the Agencies issued interim final regulations that added the written notice procedure an alternative to using EBSA Form 700.  The final regulations adopt the alternative process without change.  Instead of using Form 700, an eligible organization can give notice of its objection to some or all mandated contraceptive services by sending a letter to HHS.  The letter must include the following information:

  • Name of the eligible organization and the basis on which it qualifies for an accommodation,
  • Its objection based on sincerely held religious belief to some or all contraceptive services, including, if applicable, the subset of contraceptive service to which it objects,
  • Plan name and type (e.g., a student health insurance plan or a church plan), and
  • Name and contact information for the plan’s insurers and third party administrators.

If there is any change in the information, the regulations provide that the eligible organization should notify HHS of any changes.  HHS has provided an optional model notice.

Closely-Held For-Profit Entity.

In proposed regulations published on August 27, 2014, the Agencies requested comments on how a closely-held for-profit corporation should be defined in light of another Supreme Court decision – Burwell v. Hobby Lobby, Inc.  This request for comments was met with over 75,000 comments.  After considering the wide range of comments, the Agencies set forth modified rules providing that a for profit-entity can assert a religious objection to some or all mandated contraceptive services (and avail itself of the same accommodation available to non-profit eligible organizations) if:

  • It is not a nonprofit,
  • Has no publicly traded ownership interests (i.e., none of its ownership interests are subject to the registration requirements of Section 12 of the Securities Exchange Act of 1934), and
  • More than 50% of its ownership interests are owned directly or indirectly by five or fewer individuals (or the entity has a substantially similar ownership structure) on the date the Form 700 certification is provided to the insurer or third party administrator.

Note that an individual is considered to own the ownership interests owned, directly or indirectly, by or for his or her family. Thus, the family members count as a single owner for purposes of  these final regulations For this purpose, the term “family” includes only brothers and sisters, a spouse, ancestors, and lineal descendants.

A for-profit entity that is not certain whether it meets the above definition and/or qualifies for the accommodation can send a letter to HHS that (1) describes its structure and (2) seeks input from HHS on its qualification.  If it receives no response from HHS within 60 calendar days, it will be considered to satisfy the regulation as long as its structure remains unchanged.

These regulations will almost certainly not end the ACA contraceptive controversy.  Numerous cases are still pending in the federal courts.  In addition, an individual recently brought a case challenging the mandate on his own behalf.  There will be further developments, so stay tuned.