Final Regulations Issued on Exemption of Contraceptive Coverage

The U.S. Departments of Labor, Health and Human Services, and the Treasury released final regulations on July 2, 2013 regarding coverage of contraceptives under the Patient Protection and Affordable Care Act.  Group health plans sponsored by certain religious employers are exempt from the requirement to cover contraceptive services.  Under the final regulations, the definition of religious employer for purposes of the exemption is based solely on Section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code, which primarily refers to churches and other houses of worship.  A religious employer is not excluded from the exemption because it provides charitable social services to, or employs, persons of different religious faiths.

The final regulations establish an accommodation for eligible organizations that meet the self-certification standard so they can avoid contracting, arranging, paying, or referring for contraceptive coverage.  The temporary-enforcement safe harbor has been extended to encompass plan years beginning on or after August 1, 2013 and before January 1, 2014.  The organizations that qualified for the temporary-enforcement safe harbor will likely also qualify for the accommodation under the final regulations (the definitions of these qualifying organizations are virtually the same).  An eligible organization is one that (1) opposes providing coverage for some or all of any contraceptive services otherwise required to be covered, on account of religious objections; (2) is organized and operates as a nonprofit entity; (3) holds itself out as a religious organization; and (4) self-certifies that it meets these criteria in accordance with the provision of the final regulations.  The final rule makes no accommodation for secular or for-profit employers.

If an eligible organization provides its third-party administrator (TPA) with the self-certification form indicating its objection to contraception coverage, the TPA is obligated to pay for preventive care contraceptive services at no cost to plan participants or covered dependents or to the eligible organization.  The TPA can provide such payments on its own or arrange for an issuer or other entity to provide such payments.  The TPA is responsible for providing timely written notices of the accommodation to plan participants and beneficiaries.  The notice will indicate that the eligible organization does not fund or administer contraceptive benefits, but that the TPA will provide separate payments for contraceptive services at no cost.

An eligible organization does not need to “re-certify” to take advantage of the extended safe harbor, but it must “re-self-certify” using the new certification form (EBSA Form 700) for plan years beginning on or after January 1, 2014.  An eligible organization must provide a copy of its self-certification to its TPA.  The form does not have to be submitted to regulators but must be available for examination upon request.

If you have questions about the coverage of contraceptives by religious employers, call ASR Health Benefits at (616) 957-1751 or (800) 968-2449.