On July 8, 2020, the United States Supreme Court (USSC) upheld the Final Rules issued by the Department of Health and Human Services (HHS), which provides certain employers with a religious or moral exemption from complying with the contraceptive coverage requirements under the ACA.
Background on ACA’s Contraceptive Coverage Mandate
The Affordable Care Act (ACA) requires covered employers to provide women with “preventive care and screenings” without cost sharing. The ACA did not define “preventive care and screenings;” however, the law authorized HHS to develop guidelines on what constituted “preventative care and screenings.”
HHS subsequently released regulations that stated that preventative care included all Food and Drug Administration (FDA)-approved contraceptives, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by a health care provider. The regulations took effect in 2012 and women enrolled in most health plans and health insurance policies (non-grandfathered plans and policies) were guaranteed coverage for FDA-approved contraceptive services prescribed by a health care provider, without cost sharing.
After the regulations were enacted, rules were published giving certain employers exemptions from this contraceptive requirement:
- Certain religious employers (generally churches and houses of worship) were exempt.
- Non-profit religious organizations and closely held for profit entities could receive “accommodations” to the contraceptive requirement. Under the accommodation approach, an eligible employer did not have to arrange or pay for contraceptive coverage. Instead, employees would receive contraceptive coverage without cost-sharing through the employer’s insurer or their third-party administrator (TPA). Employers could opt for the accommodation by notifying their insurance carrier, third-party administrator (TPA), or HHS.
Overview of the Moral & Religious Objection Regulations
In 2017, President Trump issued an Executive Order that directed HHS to consider amending the contraceptive coverage regulations in order to promote religious liberty. In response, HHS issued final regulations that went into effect on January 14, 2019.
The final regulations expanded the existing following exemptions to the ACA’s contraceptive care requirement:
- The Religious Exemption automatically exempts all employers—non-profit and for-profit organizations alike—with a religious objection to contraception from complying with the contraceptive care requirement.
- The Moral Exemption exempts all non-profit employers and non-publicly traded for-profit employers with a moral objection to contraception from complying with the contraceptive care requirement.
The rules also give exempted employers the authority to decide whether their employees receive independent contraceptive care coverage through the accommodation process. In other words, by making the accommodation process voluntary for employers, employees would no longer be guaranteed the seamless coverage for contraceptive care that currently exists under the accommodation process.
Challenge and USSC Decision on the Moral & Religious Objection Regulations
Pennsylvania and New Jersey challenged the final regulations, claiming the regulations were both procedurally defective and substantively unlawful. Ultimately, the case was appealed to the USSC. The USSC held that the HHS followed proper procedures and had the authority under the ACA to promulgate religious and moral exemptions because the ACA granted them the full authority to define “preventive care and screenings” in its guidelines, which also includes full authority to establish any exemptions to the guidelines. In other words, the USSC upheld the moral and religious objections in the final regulations.
Impact on Employers
Employers are permitted to invoke the Moral and Religious Exemptions to the contraceptive requirement under the ACA. However, employers’ group health plans may still be subject to another state law that mandates contraceptive coverage. Practically speaking, this means that employers with fully insured non-grandfathered group health plans may be precluded from exercising either exemption because their insurance carriers are required to write policies that provide contraceptive coverage under state law.
In addition, employers who invoke the Moral and Religious Exemptions could potentially face private lawsuits from participants and beneficiaries under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on sex, depending on the facts and circumstances.
As such, employers should consult with qualified ERISA counsel before making any plan changes to contraceptive coverage based on the USSC ruling.
This original article was prepared for Sequoia Benefits Consulting by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. The article was later shortened and edited by Emerald Law.
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