Feb 01, 2013

HHS Issues New Rules on Contraceptive Coverage for Faith-Based Entities

Today, the U.S. Department of Health and Human Services (“HHS”) issued new proposed regulations on the provision of contraceptives by group health plans sponsored by certain faith-based organizations.  As a reminder, the Patient Protection and Affordable Care Act (“PPACA”) requires non-grandfathered group health plans to provide recommended preventive care for women, including contraceptive coverage, without cost-sharing.  Certain religious organizations, faith-affiliated hospitals, non-profits, and faith-based for-profit companies are opposed to this requirement based on religious beliefs. Numerous lawsuits have also been filed by faith-based organizations challenging the mandate.

The proposed regulations issued today provide two different approaches for answering their concerns.  First, the religious exemption, contained in previous regulations, was simplified for purposes of the contraceptive coverage mandate.  The new proposed regulations follow an existing provision of the Internal Revenue Code (the “Code”) defining religious organizations (Code Section 6033(a)(3)(A)(i) or (iii)).  This Code Section includes churches, other religious orders, and their affiliated entities.  Under the proposed regulations, these entities are exempt from providing any type of contraceptive coverage.

Not-for-profit organizations that do not meet this standard are provided with another approach for handling the contraceptive coverage mandate.  An accommodation will be made for faith-based, not-for-profit organizations that do not meet the Code definition of religious organization if they self-certify that they oppose coverage for some or all of the contraceptive coverage mandate due to religious objections, hold themselves out as religious organizations, and specify the contraceptive coverage that they object to covering. If the group health plans sponsored by these organizations are fully-insured, the insurers will provide individual insurance policies for contraceptive coverage, which is paid for by the insurance company at no cost to the individual.  If the group health plan is self-insured, the proposed regulations offer different alternatives, including requiring the third-party administrator to provide contraceptive coverage through individual insurance coverage that is funded by user fees required under the health exchanges.  The proposed regulations do not offer any relief to for-profit organizations that object to the contraceptive coverage mandate on religious grounds.

We will keep you updated on the status of these new rules and other guidance issued under PPACA.  For more information, please contact your SGR Executive Compensation and Employee Benefits Counsel.

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