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EEOC's Updated PDA Enforcement Guidance Impacts Health Benefits
Practical Law Legal Update 6-574-8585 (Approx. 6 pages)
EEOC's Updated PDA Enforcement Guidance Impacts Health Benefits
by Practical Law Employee Benefits & Executive Compensation
| Published on 21 Jul 2014 • USA (National/Federal) |
The US Equal Employment Opportunity Commission (EEOC) has issued updated enforcement guidance on the Pregnancy Discrimination Act (PDA), which has implications for employer-sponsored health benefits and retirement plans.
On July 14, 2014, the Equal Employment Opportunity Commission (EEOC) issued updated enforcement guidance on pregnancy discrimination and related issues (see Legal Update, EEOC Issues Updated Pregnancy Discrimination Enforcement Guidance). Title VII of the Civil Rights Act, which bans discrimination in employment on the basis of race, color, religion, sex or national origin, was amended by the Pregnancy Discrimination Act (PDA) to prohibit discrimination on the basis of pregnancy, childbirth or related medical conditions.
Among other things, the guidance addresses how Title VII, as amended by the PDA, impacts employee benefits affecting pregnant employees, including health insurance and retirement plans. As amended, Title VII requires employers to treat women affected by pregnancy, childbirth or related medical conditions the same for all employment-related purposes, including receipt of benefits under fringe benefits programs, as other persons not so affected but similar in their ability (or inability) to work. Under implementing regulations, fringe benefits include health, accident, life insurance and retirement benefits.
Health Insurance Coverage
Nondiscrimination and Parity Rules
According to the EEOC guidance, employers that sponsor health insurance coverage must:
- Include coverage of pregnancy, childbirth and related medical conditions.
- Apply the same terms and conditions for pregnancy-related costs as for medical costs unrelated to pregnancy.
This means that:
- If the plan covers preexisting conditions, it must cover the costs of an insured employee's preexisting pregnancy. (Note that under the Affordable Care Act (ACA), group health plans may not impose preexisting condition exclusions for plan years beginning on or after January 1, 2014 (see Practice Note, Preexisting Condition Exclusions and Rescissions Under the ACA).
- If the plan covers a certain percentage of the medical costs for non-pregnancy-related conditions, it must cover the same percentage of recoverable costs for pregnancy-related conditions.
- If the medical benefits are subject to a deductible, pregnancy-related medical costs may not be subject to a higher deductible.
- The plan may not impose limits applicable only to pregnancy-related medical expenses for any services (for example, doctor's office visits, lab tests, x-rays, ambulance service or recovery room use) (see generally Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA).
- The plan must cover prescription contraceptives on the same basis as prescription drugs, devices, and services that are used to prevent the occurrence of medical conditions other than pregnancy (see Practice Notes, Contraceptives Coverage Under the ACA and Preventive Health Services Under the ACA).
The guidance also indicates that employers:
- Must provide the same level of medical coverage to female employees and their dependents as they provide to male employees and their dependents.
- Need not provide the same level of medical coverage to their employees' wives as they provide to female employees.
Contraceptives Coverage
The EEOC has taken the position that Title VII's prohibition on pregnancy-based discrimination extends to discrimination related to a woman's use of contraceptives. As a result, an employer can violate Title VII by offering health insurance that excludes coverage of prescription contraceptives, whether the contraceptives are prescribed for birth control or medical purposes. To comply, a plan must cover prescription contraceptives on the same basis as prescription drugs, devices and services used to prevent the occurrence of medical conditions other than pregnancy.
Under the ACA, plans and insurers must provide coverage for certain preventive services, including contraceptive coverage, without cost-sharing (for example, copayments, coinsurance or deductibles) (see Practice Note, Contraceptives Coverage Under the ACA). However, this requirement is subject to an administrative exemption and accommodations and, more recently, a Supreme Court decision. In Burwell v. Hobby Lobby Stores, Inc., (U.S. 2014), the Supreme Court ruled that the contraceptives coverage mandate violates the Religious Freedom Restoration Act (RFRA) as applied to for-profit closely held corporations with religious objections to the contraceptives mandate (see Legal Update, Supreme Court Strikes Contraceptives Mandate as Applied to For-Profits with Religious Beliefs).
In Q&As issued with the pregnancy discrimination guidance, the EEOC addresses the Hobby Lobby decision by noting that the EEOC's position on contraceptives coverage, as explained in the pregnancy discrimination guidance, does not address whether certain employers might be exempt from Title VII's requirements on RFRA or First Amendment grounds.
Retirement Plans
Regarding retirement plans, the EEOC guidance states that employers must:
- Allow women who are on pregnancy-related medical leave to accrue seniority in the same way as employees who are on leave for reasons unrelated to pregnancy.
- Treat pregnancy-related medical leave the same as other medical leave in calculating years of service to be credited in determining an employee's eligibility for a pension or early retirement.
FMLA
The guidance also addresses other federal requirements affecting pregnant workers, including the FMLA, under which employers must:
- Maintain an employee's existing level of group health plan coverage while the employee is on FMLA leave, as if the employee had not taken leave.
- Restore an employee who has returned from FMLA leave to the employee's original job, or to an equivalent job with equivalent pay, benefits, and other employment conditions.
Practical Impact
In addition to the pregnancy-related protections addressed under the EEOC's guidance (see Legal Update, EEOC Issues Updated Pregnancy Discrimination Enforcement Guidance), it should be noted that the ACA changed the landscape regarding such benefits through rules that include:
- Required coverage for prenatal services and breastfeeding counseling with no cost-sharing (see Practice Note, Preventive Health Services Under the ACA).
- A prohibition on group health plan preexisting condition exclusions, generally effective for plan years beginning on or after January 1, 2014 (see Practice Note, Preexisting Condition Exclusions and Coverage Rescissions Under the ACA).
Regarding coverage of contraceptives coverage, however, the EEOC appears to acknowledge in the Q&As that its position may be subject to challenge by employers asserting an exemption from Title VII requirements on RFRA or First Amendment grounds. It remains to be seen whether this aspect of the guidance would survive if litigated.