Agencies Issue Final Rule on Contraceptive Coverage

The Departments of Labor, Health and Human Services, and the Internal Revenue Service have issued a final rule that adopts without change interim final regulations that exempt group health plans and group health insurance coverage sponsored by certain religious employers from having to cover certain preventive health services under provisions of the Patient Protection and Affordable Care Act. The interim final rule issued in August 2011 expands the types of women’s health preventive services – including birth control – that must be covered without any cost-sharing by non-grandfathered health plans as required under the Affordable Care Act. The rule exempts from this requirement those employers whose “primary purpose” is to instill religious values. For the purposes of this exemption, a religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization.

On January 20, 2012, the HHS announced that it would give other non-exempt religious-affiliated employers – such as religious schools and hospitals – that provide health coverage to their employees an extra year to comply with the requirement that their plans include coverage for birth control. Specifically, the HHS announcement stated that non-exempt religious employers will have until August 1, 2013 to ensure that their plans include contraceptive coverage and do not charge co-pays, co-insurance or deductibles for FDA-approved birth control methods.

As discussed in the final regulations, during this temporary enforcement safe harbor period, the HHS plans to “develop and propose changes to these final regulations that would meet two goals—providing contraceptive coverage without cost-sharing to individuals who want it and accommodating non-exempted, non-profit organizations' religious objections to covering contraceptive services.” The agency explains that it will initiate a rulemaking:

to require issuers to offer insurance without contraception coverage to such an employer (or plan sponsor) and simultaneously to offer contraceptive coverage directly to the employer's plan participants (and their beneficiaries) who desire it, with no cost-sharing. Under this approach, the Departments will also require that, in this circumstance, there be no charge for the contraceptive coverage.

With respect to self-insured plans, the Departments “intend to develop policies to achieve the same goals for self-insured group health plans sponsored by non-exempted, non-profit religious organizations with religious objections to contraceptive coverage.”

The rule notes that it will examine and take into consideration the existing policies and practices of issuers and religious organizations in the 28 states where contraception coverage requirements already exist. In Hawaii, for example:

state health insurance law requires issuers to offer plan participants in group health plans sponsored by religious employers that are exempt from the State contraception coverage requirement the option to purchase this coverage in a way that religious employers are not obligated to fund it. It is our understanding that, in practice, rather than charging employees a separate fee, some issuers in Hawaii offer this coverage to plan participants at no charge. The Departments will work with stakeholders to propose and finalize this policy before the end of the temporary enforcement safe harbor.

This rule becomes effective on April 16, 2012.

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