Final Regulations Broaden Religious and Moral Exemptions From Contraceptive Coverage Mandate

The DOL, HHS, and IRS have released final regulations providing religious and moral exemptions from health care reform’s contraceptive coverage mandate. These regulations finalize and generally adopt, with clarifications, interim final regulations issued in 2017 (see our Checkpoint article).

As background, qualifying religious employers are exempt from the contraceptive coverage mandate, and certain other employers with religious objections to contraceptives may engage in an accommodation process relieving them of this coverage obligation (see our Checkpoint article). Interim final regulations expanded the exemption to include certain individuals or entities based on their sincerely held religious beliefs. And separate interim final regulations extended the exemption to others objecting to coverage based on sincerely held moral convictions. The interim final regulations also maintained the existing accommodation process as a voluntary option for exempt individuals or entities. However, nationwide preliminary injunctions have blocked enforcement of both sets of regulations (see our Checkpoint article). Here are highlights of the final regulations:

• Religious Exemption Regulations. These regulations, like the interim final regulations, expand the exemption from the contraceptive coverage mandate to include any individual or nongovernmental entity that objects to providing coverage of some or all contraceptives based on sincerely held religious beliefs. The exemption covers churches, nonprofits, and for-profit entities (closely held and publicly traded). The final regulations also maintain the voluntary accommodation process, which allows employees to receive contraceptive coverage through the employer’s insurer or TPA without the employer paying for it. While generally following the interim final regulations, the final regulations include several changes to clarify the intended scope of the rules. One such clarification is that exemptions apply to an objecting organization’s plan only to the extent of the objections—i.e., they encompass only the items to which the entity or individual objects. In addition, technical changes modify the rules governing when an entity can revoke an accommodation, and provide a transitional rule for entities currently using the accommodation process.
• Moral Exemption Regulations. Like the interim final regulations, these regulations expand the exemption to entities or individuals objecting to coverage of some or all contraceptives based on sincerely held moral convictions (but not religious beliefs), leaving in place the existing accommodation process as a voluntary option. The exemption applies to nonprofit organizations and closely held businesses (but not publicly traded entities), as well as higher education institutions, health insurers serving exempt entities, and individuals. The preamble clarifies that the exemption is available to association health plans sponsored by nonprofit organizations or for-profit entities with no publicly traded ownership interests.

EBIA Comment: The contraceptive coverage mandate has long been a contentious issue. The court orders blocking enforcement of the interim final regulations have been appealed, and the final regulations are certain to produce further litigation seeking to block their enforcement. Those potentially eligible for the expanded exemptions and the optional accommodation process will want to study the details, keeping in mind that ERISA plans must make disclosures if coverage is changed. For more information, see EBIA’s Health Care Reform manual at Section XII.C (“Coverage of Preventive Health Services”) and EBIA’s Group Health Plan Mandates manual at Section XIV.E (“Contraceptive Coverage: Exemptions and Accommodations Based on Religious Beliefs and Moral Convictions”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.1 (“Preventive Health Services”).

Contributing Editors: EBIA Staff.