Effective Oct. 6, 2017, the HHS, the Treasury Department and the DOL (the Departments) jointly issued interim final rules that broaden the exemption from the PPACA’s contraceptive mandate. As background, the PPACA requires plans to cover certain preventive services with no cost-sharing. Since the implementation of the PPACA, a number of religious institutions objected to being required to offer certain contraceptives, prompting the Obama administration to provide a waiver and accommodation process for those institutions. Additionally, in a case that went all the way to the Supreme Court, the Court ruled in favor of Hobby Lobby, holding that closely held employers could also choose not to cover certain contraceptives.
The Trump administration’s interim final rules basically allow any employer to claim a religious or moral objection to offering certain contraceptives, including non-closely held companies and even publicly traded companies. Specifically, the rule on religious exemptions allows any individual or nongovernmental entity (including churches, nonprofit and for-profit entities, whether or not they’re closely held) to object to providing coverage for all or some subset of contraceptives if they have sincerely held religious beliefs against offering such coverage.
Additionally, the rule on moral exemptions allows an entity or individual to object to contraceptive coverage based on sincerely held moral convictions (that are not religious in nature). This rule does not apply to publicly traded companies.
Interestingly, the rules don’t actually define or determine when an entity has sincerely held religious or moral beliefs. Instead, the preambles of both rules ascertain that religious or moral objections would be determined according to state law. Both rules also make the accommodation process optional for entities.
Further, the rules also allow employees to claim a religious objection to being covered by a plan that provides coverage for contraceptives (if their insurance provider/employer plan allows individuals to obtain other health coverage that doesn’t cover contraceptives).
Employers should keep in mind that the rules require employers to notify employees of any change in contraceptive coverage, in accordance with current ERISA rules. So, for example, where the decision not to cover certain contraceptives is a material modification or reduction in covered services, the employer will need to provide employees with Summaries of Material Modification. In addition, if that decision is made outside of open enrollment/renewal, the employer may also be responsible for an advance notice under the summary of benefits and coverage (SBC) rules, which may require 60-days’ advance notice of such a change.
Employers who wish to avail themselves of these exemptions should work with counsel to ensure that they understand the exemption and implement it in a compliant manner.
The Departments are soliciting comments on the rules (which will be due by Dec. 5, 2017). As with many of the proposed changes to the PPACA, this rule has already sparked litigation, as major women’s rights groups and some states oppose the rule. We’ll continue to follow developments on these rules.
Religious Exemptions Interim Final Rule »
Moral Exemptions Interim Final Rule »