QUESTION: Our business intends to stop covering certain contraceptive services under the company’s ERISA-covered health plan as soon as possible. The owners have strongly held religious beliefs against contraception and have been using the accommodation process whereby the insurer has provided contraceptive coverage to participants and beneficiaries outside of the group health plan. The owners now wish to revoke the accommodation and exclude certain contraceptive coverage under the plan. Do we need to inform plan participants and beneficiaries about this change?
ANSWER: Yes, advance written notice is required to inform plan participants and beneficiaries of the revocation of the accommodation. As background, the Affordable Care Act generally requires, as part of women’s preventive health services, that non-grandfathered, nonexcepted group health plans provide coverage for all FDA-approved contraceptive methods, as prescribed by an in-network health care provider, without cost-sharing. As your question indicates, prior guidance allowed certain employers asserting religious objections to contraceptives to avoid the coverage mandate by engaging in an accommodation process under which an insurer or TPA arranged for the contraceptive coverage (see our Checkpoint article). October 2017 regulations expanded the exemption for objecting employers, so that they no longer need to use the accommodation process to avoid the coverage mandate (see our Checkpoint article).
The regulations state that eligible employers revoking their use of the accommodation process must provide written notice to participants and beneficiaries. If the change will be effective as of the beginning of a plan year, participants and beneficiaries must be notified at least 30 days before the first day of the plan year in which the revocation will first become effective. Alternatively, the change can be effective during a plan year so long as written notice is given at least 60 days before the effective date of the change, and the change and notice are consistent with other applicable law and contract provisions regarding modification of benefits (see our Checkpoint article).
Note that these timeframes are earlier than the general ERISA expedited disclosure rule for material reductions (and supersede previous agency FAQ guidance; see our Checkpoint article). More broadly, ERISA requires that a group health plan summary plan description (SPD) describe the extent to which the plan covers preventive services, including contraceptive services. This means that the plan’s SPD will need to describe the exclusion of any contraceptive services going forward. Note that other disclosure requirements may also apply—for example, under state insurance law applicable to health insurers.
Guidance on this topic continues to evolve, and there have been ongoing court challenges to the scope and nature of the exemptions and accommodations (see, e.g., our Checkpoint article). It will be important for a business like yours to monitor further developments.
For more information, see EBIA’s ERISA Compliance manual at Sections XXIV.E.2 (“When Is an SMM Required?”) and XXIV.K (“Additional SPD Content Requirements for Group Health Plans”), and EBIA’s Health Care Reform manual at Sections XII.C (“Coverage of Preventive Health Services”) and XVI.H (“Updating the SBC: Notice of Material Modifications”). See also EBIA’s Group Health Plan Mandates manual at Section XIV.E (“Contraceptive Coverage: Exemptions and Accommodations Based on Religious Beliefs and Moral Convictions”) and EBIA’s Self-Insured Health Plans manual at Section XIII.C.1 (“Federally Mandated Benefits: Preventive Health Services”).
Contributing Editors: EBIA Staff.