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Sep 2, 201410:35 AMForward HR

with Diane Hamilton and Nilesh Patel

What are the new religious exemption rules for contraception coverage?

(page 2 of 2)

If Wheaton College and similar employers truly want no part in the process, they have 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 of shifting 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 over how the government can ensure contraceptive coverage while accommodating employers’ religious objections.

Defining a closely held corporation

The second set of regulations address the Supreme Court’s 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 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 has a defined fraction of ownership that is concentrated in a limited and specified number of owners. For example, it could be a corporation in which five or fewer individuals own more than 50% of the organization.

The final rule will likely include a requirement that corporate actions must be taken in a specific way in order to justify a religious objection. This requirement will not look at the reasonableness or sincerity of the objection. Rather, the organization would have to 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 Oct. 21.

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About This Blog

 Diane Hamilton, PCC, SPHR, is the owner and founder of Calibra, a coaching and consulting firm focused on maximizing leadership potential. Nilesh Patel is the principal attorney of the Mahadev Law Group, LLC, which focuses on human resources and employment law issues for organizations. He can be reached at npp@mahalawgroup.com. Both bloggers are members of Wisconsin SHRM, which is dedicated to being the state leader in HR management and the premier source for HR expertise and resources. More information can be found at www.wishrm.org. You can follow the WI SHRM blog at http://wishrm.wordpress.com.

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