On May 1, 2019, the New York Department of Financial Services (DFS) published Supplement No. 2 to insurance Circular Letter No. 1 (2003). The updated letter relates to a narrow exemption for religious employers from providing coverage for contraceptive items and services. The letter states that in NY, a religious employer may request a carrier to issue a group or blanket policy or contract without contraceptive coverage where contraceptive items or services are contrary to the employer’s religious tenets, provided that the employer meets all the criteria of being a “religious employer.”
Under NY law, an employer is a “religious employer” if they meet four criteria:
- The inculcation of religious values must be the employer’s purpose.
- The employer must primarily employ persons who share the employer’s religious tenets.
- The employer must serve primarily persons who share the employer’s religious tenets.
- The employer must be a non-profit organization (as described in IRC Section 6033(a)(3)(A)(i) or (iii)).
Religious employers opting not to include contraceptive coverage have to provide written notice of that decision to employees prior to enrollment in the plan (with a list of contraceptive items/services that the employer refuses to cover for religious reasons). The carrier also must notify enrollees of the contraceptive coverage limitations, and must allow an individual to purchase the contraceptive coverage from the carrier directly (via rider). The carrier can choose to charge an additional premium or cover it automatically for no additional cost.
The letter states that the New York Court of Appeals (NY’s highest court) has upheld the religious employer exemption generally. The letter reminds carriers, though, that the scope of the exemption is narrow, and that there are limitations on the types of employers that can qualify. Specifically, employers such as religious schools, religious nursing homes, and religious health care facilities were found not to qualify as “religious employers.” Carriers must ensure that an employer is in fact a religious employer that meets all of NY’s criteria before granting the exemption from providing contraceptive coverage, even if that means requiring the employer to submit additional proof.
As for impact on employers, the letter is narrow in its scope. It would impact only religious employers: those that want or are attempting to be considered religious employers for purposes of providing contraceptive coverage. Employers that are hoping to meet that narrow exemption should work with outside counsel to ensure the employer is appropriately complying with both NY state and federal law.
Supplement No. 2 to insurance Circular Letter No. 1 (2003) »