New regulations on the health care reform provision requiring health plans to provide women’s preventive care and services without cost sharing have been proposed to amend rules issued in August 2011. The 2011 rules included all Food and Drug Administration-approved contraception for women (such as abortion and abortifacient drugs (e.g., the “morning-after” pill)) in the definition of women’s preventive care and services. The 2011 regulations are effective for the first plan year beginning on or after August 1, 2012.
Religious Employer Exemption
The 2011 regulations exempted “religious employers.” Such an employer is defined as an organization (1) for which the inculcation of religious values is its purpose, (2) that primarily employs and serves persons who share its religious tenets, and (3) that is a nonprofit organization described in Internal Revenue Code sections 6033(a)(1) and 6033(a)(3)(A)(i) or (iii).
After receiving public comments, the government decided that that definition is too narrow. Therefore, it proposes relaxing the definition by retaining only the last requirement, that is, a religious employer is one that is organized and operates as a nonprofit entity referred to in Code section 6033(a)(3)(A)(i) or (iii). That Code section refers to churches, their integrated auxiliaries, and conventions or associations of churches as well as the exclusively religious activities of any religious order. Thus, the many religious entities that serve the needs of persons outside the entities’ own faith and employ individuals who do not necessarily share the entities’ religious tenets will be able to meet the proposed revised definition of religious employer.
Employer Objecting on Religious Grounds
Many organizations that do not meet the definition of religious employer nevertheless oppose contraception (or specific contraception, such as abortion) for religious reasons. In February 2012, Health and Human Services (HHS) issued guidance providing a temporary enforcement safe harbor for certain employers with respect to the requirement to cover contraceptive services. That guidance allowed an additional year for a plan maintained by a non-profit organization whose plan consistently does not covered contraceptive services for religious reasons at any point from February 10, 2012, to comply with the requirement to do so. HHS issued a bulletin in August 2012 clarifying the February 2012 guidance.
Now, the government proposes additional relief for such employers – permitting them to avoid covering contraceptive care under their own group health plans where the insurer (for full-insured plans) or third-party administrator (for self-funded plans) arranges for individual policies covering contraceptive care. The insurers issuing such policies, in turn, would be eligible to offset the cost of providing that specific coverage by claiming an adjustment in their Affordable Insurance Exchange fees.
Employers wishing to comment on the proposed regulations have until April 8, 2013.