Enter to open, tab to navigate, enter to select
Contraceptive Coverage Proposals Would Expand Role of Insurers and TPAs
Practical Law Legal Update 7-518-5090 (Approx. 5 pages)
Contraceptive Coverage Proposals Would Expand Role of Insurers and TPAs
by PLC Employee Benefits & Executive Compensation
| Published on 20 Mar 2012 • USA (National/Federal) |
On March 16, 2012, the Departments of Labor, Health and Human Services and Treasury requested public comments on a proposed accommodation for religious organizations that object to providing contraceptive coverage, as required under the Affordable Care Act's (ACA's) preventive services rules.
On March 16, 2012, the DOL, HHS and Treasury (Departments) issued an advance notice of proposed rulemaking (Notice) that would:
- Amend existing regulations implementing the requirement under the Affordable Care Act's (ACA's) preventive services rules that group health plans provide coverage for contraceptives without cost sharing (see Practice Note, Coverage of Preventive Health Services under the ACA).
- Offer the Departments' proposals for an accommodation under which participants and beneficiaries in plans sponsored by certain religious organizations that object to providing contraceptive coverage could nonetheless receive this coverage, including:
- which religious organizations should be accommodated;
- who would administer the accommodation for insured and self-insured plans sponsored by religious organizations; and
- how the accommodation would be funded.
- Request public comments on the Departments' accommodation proposals.
The Notice follows HHS' announcement in February 2012 of a temporary enforcement safe harbor that:
- Applies for group health plans sponsored by certain religious-affiliated organizations (see Legal Update, HHS Guidance on Contraceptives Establishes Temporary Safe Harbor for Religious Organizations).
- Is in effect until the first plan year beginning on or after August 1, 2013.
The Departments anticipate that the proposals will result in amendments to the final regulations, including an accommodation for religious organizations, that will be finalized and effective by the time the temporary enforcement safe harbor ends.
Employers and Organizations That Qualify for the Accommodation
The proposed accommodation would generally be available for certain religious organizations that:
- Have religious objections to providing contraceptive coverage, including student health plans of non-profit religious institutions of higher education. For more information on student health plans, see Legal Update, Final HHS Rules for Student Health Plans Include Phase-in of Annual Limit Requirement.
- Do not qualify for the Departments' full exemption for religious employers (see Legal Update, HHS Extends Compliance Date for Contraceptives Coverage for Certain Nonprofit Employers).
The Notice requests further comment on which religious organizations should be eligible for the accommodation.
Administering the Accommodation for Religious Organizations
According to the Notice, the Departments will provide rules for administering the accommodation under which:
- A religious organization would not be involved in contracting, arranging, paying or referring for contraceptive coverage.
- Contraceptive coverage would be provided by an independent third party, which would be:
- the insurer for insured plans; or
- a third-party administrator (TPA) or some other entity for self-funded plans.
Under the Departments' proposals, the religious organization would provide the insurer or TPA written notice as part of a self-certification process that the organization:
- Is a religious organization that qualifies for the accommodation.
- Will not act as the plan administrator or claims administrator for contraceptive coverage.
The insurer or TPA must then:
- Provide or arrange for contraceptive coverage for the organization's participants and beneficiaries.
- Notify participants and beneficiaries of the coverage.
- Protect the privacy of covered participants and beneficiaries who use contraceptive services.
The TPA of a self-funded plan would also be required to have:
- Control over the funds available to pay for the contraceptive coverage.
- Authority to act as plan and claims administrator for the coverage.
- Access to information necessary to communicate with participants and beneficiaries.
Also, the Departments would add new regulations under ERISA providing that the religious organization's notice to the TPA of its refusal to provide and fund contraceptives would:
- Be an instrument under which the plan is operated.
- Effectively designate the TPA as the ERISA plan administrator for providing contraceptives.
The Departments requested comments on approaches a TPA could use to fund contraceptives coverage without using funds provided by the religious organizations (for example, revenue from drug rebates).
Practical Impact
Although the Notice is only the first step in a process that will eventually include proposed and amended final regulations, it would have a significant impact on insurers and TPAs, who may wish to comment on the Department's proposals. TPAs, in particular, may, among other things, be concerned about:
- The details of how funding the contraceptive coverage would work.
- The requirement to assume ERISA plan administrator status for providing contraceptive coverage.
- Coordinating between multiple TPAs.
The comment period will end 90 days after the Notice is published in the Federal Register.
For more information on the requirement to provide contraceptive coverage under the ACA's preventive services rules, see Legal Updates: