- On November 26, 2018
- ERISA, HHS
Earlier this month, the federal Departments of Health and Human Services (HHS), Labor, and Treasury released two final regulations that provide processes for non-governmental entities, individuals and insurers to object to insurance coverage for contraceptives requirement in the preventive care services section of the Affordable Care Act (ACA). One rule covers religious objections, and a narrower one provides for moral objections. The final rules are very similar to interim final regulations released in October 2017. They both allow entities that object to covering contraceptives to choose between complying with the ACA mandate, claiming an exemption, or using an optional accommodation process that enables employees to get contraceptive coverage through the insurer or third-party administrator without the employer having to pay for it directly.
Additionally, the final rules establish that the Health Resources and Services Administration (HRSA) guidelines on contraceptive coverage do not apply at all to entities that claim protections under the rules. That means an entity can claim a religious or moral objection to certain contraceptives and still elect to cover others, and that they will not be subject to federal penalties for failing to cover contraceptives. Furthermore, employers who claim an exemption do not need to get a certification from the federal government or report on their status in any way, and insurers are granted a safe harbor to take an employer’s attestation about the applicability of the rules. If an entity claiming the exemption is subject to ERISA, then they will need to report on the scope of their coverage in their plan documents. If they change the scope of their coverage by eliminating all or certain contraceptives, employers or insurers will still need to inform enrollees 60 days ahead of time by issuing a new summary of benefits and coverage.
Also, if an entity decides to switch from using the accommodation process to electing to not covering all or certain contraceptives entirely, they can do so this coming year with 60-days notice. However, in future years, they will only be able to make such a change on the first day of a new plan year.
For brokers, it is essential to understand some critical details about the new rules. With the optional accommodations process, the rule allows employers to elect to have their insurer or third-party administrator pay for contraceptive coverage for their employees without being charged directly; however, what it does not mandate is that insurers or third-party administrators contract with employers that want to use this accommodation. That means employers who wish to pursue the accommodation could limit their purchasing choices. Also, while individual enrollees in a group plan can claim a religious or moral exception to the ACA’s contraceptive requirement, insurers and employers are not required to accommodate them. Insurers and employers may offer a contraceptive-free option to objecting individuals without penalty if they choose, but nothing is forcing them to do so. Finally, the two final rules in no way impact existing state-mandated benefit requirements, including the coverage mandates in New Jersey and Delaware, so the final rules will have limited impact on employers that are bound by those mandates.
As for the scope of the final rules, the religious exception rule is available to most non-governmental employers and individuals, including nonprofits, for-profits, private colleges and universities, insurers, and people who claim a sincere religious objection to all or some contraceptives. Association health plans formed around sincerely held religious beliefs could also exert the exemption. The scope of the moral exemption rule is a little narrower and only applies to non-governmental employers, association plans and individuals that meet specific conditions.
The final rules are scheduled to go into effect on January 14, 2019, however, legal challenges are expected, so it is difficult to predict if they will go into effect as planned, or if they will ultimately be halted or changed. If the federal courts make any changes to the final contraceptive rules moving forward, Kistler Tiffany Benefits will inform our broker partners right away.
By Jessica Waltman, Special Contributor
Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.