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No New Religious Accommodation in ACA Contraceptives Coverage Challenge
Practical Law Legal Update w-005-3175 (Approx. 6 pages)
No New Religious Accommodation in ACA Contraceptives Coverage Challenge
by Practical Law Employee Benefits & Executive Compensation
| Published on 10 Jan 2017 • USA (National/Federal) |
The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (Departments) have issued additional FAQ guidance addressing compliance with the Affordable Care Act's (ACA's) contraceptives mandate. The Departments declined to change the existing religious accommodation, addressed in implementing regulations, in response to litigation challenging the contraceptives mandate under the Religious Freedom Restoration Act (RFRA).
On January 9, 2017, the DOL, HHS, and Treasury (Departments) issued FAQ guidance addressing the status of a religious accommodation they made available under regulations implementing the ACA's contraceptives coverage mandate (see Practice Notes, Contraceptives Coverage Under the ACA and Preventive Health Services Under the ACA, Other Than Contraceptives).
Background
The ACA requires nongrandfathered group health plans and insurers to provide coverage for certain preventive health services without cost-sharing, including preventive care and screenings for women under guidelines supported by the Health Resources and Services Administration (HRSA). Plans and health insurers must provide coverage for all Food and Drug Administration (FDA)-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by a doctor. In implementing this requirement, the Departments provided an exemption for group health plans of religious employers and an accommodation for certain nonprofit "eligible organizations" that objected to covering contraceptives but were ineligible for the exemption (see Legal Update, Final Contraceptive Rules Include TPA Role for Providing Certain Contraceptive Coverage). Under the accommodation, an objecting eligible organization may either self-certify its objection to:
- Its health insurer (in the case of insured plans) or third-party administrator (TPA) (for self-funded plans) using Form 700.
- HHS, without using any specified form.
Following a successful legal challenge, the Departments extended the accommodation to closely held for-profit entities (see Legal Updates, Supreme Court Strikes Contraceptives Mandate as Applied to For-Profits with Religious Beliefs, Departments Adjust Contraceptives Rules in Response to Supreme Court Cases, and For-Profit Companies Eligible for Accommodation under Final ACA Contraceptives Rules).
In subsequent litigation, some employers asserted that the contraceptives coverage mandate violated the Religious Freedom Restoration Act (RFRA), even with the accommodation. The issue reached the Supreme Court, which initially requested additional briefing on whether and how contraceptive coverage could be obtained through plan insurers in a way that did not require an employer's involvement. In May 2016, citing "substantial clarification and refinement" in the parties' positions, the Supreme Court:
- Vacated the judgments of the circuit courts of appeals in this litigation.
- Remanded to those courts for further proceedings (see Legal Update, Supreme Court Returns Contraceptives Cases to the Courts of Appeals).
According to the Court, the parties should be allowed sufficient time to arrive at a new accommodation that balanced the parties' respective interests. In July 2016, the Departments sought input, through a request for information (RFI), regarding whether changes to the existing accommodation process could resolve the conflict. The Departments received more than 54,000 comments in response to their RFI.
No New Accommodation
In the January 2017 FAQ guidance, the Departments indicated that they would not be making any change to the accommodation at this time. According to the Departments, the RFI comments offered "no feasible approach" to balance religious objectors' concerns against the ACA's policy priorities, particularly given the administrative and operational challenges involving the accommodation process.
The Departments suggested that it was unworkable to have an accommodation that did not include a written notification from employers to their insurers. For example, insurers indicated to the Departments that eliminating written notifications would force them to establish new systems to separately track:
- Employers (and their employees) that are exempt from the contraceptives mandate (for whom insurers must merely eliminate contraceptive benefits from the employers' plans).
- Those that are eligible organizations that qualify for an accommodation, for whom insurers must take the additional steps of:
- making separate payments for contraceptives; and
- providing notice of the availability of these payments.
Also, there may be differences among eligible organizations regarding the types of contraceptive services that they find objectionable. Insurers also asserted that eliminating written notice could:
- Expose them to legal liability because they would not have a written record to demonstrate compliance (for example, if they relied on an organization's oral representation of eligibility for an accommodation that turned out to be incorrect).
- Create confusion and miscommunication, and result in billing problems and reduced access to care for women.
According to the Departments, it was also unclear that eliminating the written notification requirement would satisfy religious objectors' RFRA concerns.
Other Approaches Rejected
The Departments rejected a proposal under which insurers would be required to provide contraceptive coverage for objecting employers through separate insurance policies that cover only contraceptives. Among other reasons, the Departments noted uncertainty as to whether some state insurance regulators were authorized to approve such single-benefit policies (aside from dental or vision benefits). Also, commenters indicated that separate policies might have a different provider network (that is, from the network for the women's other health benefits), and so the separate policies might not include the women's regular doctors.
In the self-funded context, the RFI did not result in a feasible method for providing oral notification to TPAs. The Departments took the view that without a written instrument, there would be no way to designate a TPA as the ERISA plan administrator for arranging or providing separate payments for contraceptive services (see Practice Note, Contraceptives Coverage Under the ACA: Accommodation for Self-Insured Plans Sponsored by Eligible Organizations).
Separate Contraceptives Card and Activation
According to the Departments, if objecting employers prefer the use of a separate enrollment card for contraceptive coverage, then insurers or TPAs could provide a separate contraceptive card. Under this method, women would:
- Not enroll in a separate insurance policy for contraceptive coverage.
- Receive a separate enrollment card that is automatically activated if a woman who is enrolled in the plan attempts to obtain contraceptive benefits.
The card could:
- Use a different design to distinguish it from enrollment cards used to access services covered by the employer's plan.
- Omit the name of the employer or plan.
- Use either the same identification number as is used for the plan generally, or could have a different number (assuming there is a linking mechanism that enables an insurer or TPA to easily identify enrollees).
However, this arrangement must not:
- Be used as an impediment to obtaining benefits.
- Unduly hamper a participant or beneficiary from accessing benefits provided under the accommodation.
Practical Impact
This FAQ may represent one of the final pronouncements by the Obama administration on an ACA requirement that has proven especially difficult to implement. For the moment, at least, the Departments' accommodation will remain unchanged in the face of plaintiffs' RFRA challenges, though this FAQ is almost certainly not the last word on the accommodation's validity.