What are the new religious exemption rules for contraception coverage?

The Obama administration has published new regulations to address recent U.S. Supreme Court decisions concerning employers who have religious objections to offering health coverage for contraceptives.

The new rules are meant to take into account eligible employers’ religious beliefs while ensuring that contraceptive services remain available to women. There are two new sets of regulations. One is effective immediately and creates a new method for eligible nonprofit employers to object to contraceptive care coverage. The other asks the public for comments on how to define a closely held corporation that is eligible for a religious accommodation.

Interim final rules effective immediately

The first set of regulations came in response to a temporary injunction issued by the U.S. Supreme Court a few days after the Hobby Lobby decision. The regulations are for nonprofits that consider themselves religious organizations.

Wheaton College, a Christian nonprofit school in Illinois, requested the injunction because it objected to enabling contraceptive coverage through its health plan. The college had three concerns: 1) It did not want to offer “abortion-causing” contraceptive coverage, 2) it did not want to contract with an insurer that offered such contraceptive coverage, and 3) it did not want to participate in a system where that type contraceptive coverage would be triggered by filling out a form or designating its insurer as its proxy.  

Wheaton College’s case has been winding its way through the 7th Circuit Court of Appeals, but in the meantime, on July 3, the Supreme Court granted the injunction and said it was enough for a religious employer to simply write to the federal government and claim that the organization meets the requirements for an exemption from the contraceptive coverage requirement.

The new regulations, which came into effect on Aug. 27, address the Wheaton College injunction. If an employer that is self-insured or has a group health plan objects to filling out the government’s form, that organization can instead notify the U.S. Department of Health and Human Services. The notice must include: 1) the name of the organization, 2) the basis on which it qualifies for an accommodation, 3) its objection based on sincerely held religious beliefs to coverage of some or all contraceptive methods, 4) the plan name and type, and 5) the name and contact information of the plan’s third-party administrators and health insurance providers. The notice can be sent by email or mail, but not by fax.

Employers with religious objections to contraceptive coverage should evaluate whether they are eligible organizations that can seek the accommodation that has been offered. They can also send in comments about these new regulations to the Department of Labor for 60 days from the effective date.

One thing to note about these new regulations is that they don’t appear to truly address the objections about requiring contraceptive coverage. Wheaton College did not want to trigger or enable certain types of contraceptive coverage. If that coverage is triggered by filling out a form or sending a notice to the government, the employer will still play some part in contraceptive care being offered by an insurer.

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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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