Final Contraceptives Rules Include Religious and Moral Convictions Exemptions

Practical Law Legal Update w-017-5045 (Approx. 9 pages)

Final Contraceptives Rules Include Religious and Moral Convictions Exemptions

by Practical Law Employee Benefits & Executive Compensation

Background

Under the ACA, nongrandfathered group health plans and insurers must provide coverage for certain preventive health services without cost-sharing, including preventive care and screenings for women under guidelines supported by the Health Resources and Services Administration (HRSA) (Section 2713 of the Public Health Service Act (PHSA) (42 U.S.C. § 300gg-13); see Group Health Plans Toolkit and Practice Note, Grandfathered Health Plans Under the ACA). Plans and health insurers must provide coverage for all Food and Drug Administration (FDA)-approved contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by a doctor.

In implementing the ACA's contraceptives mandate, the Departments provided an exemption for group health plans of religious employers and an accommodation for certain nonprofit "eligible organizations" that objected to covering contraceptives but were ineligible for the exemption (see Legal Update, Final Contraceptive Rules Include TPA Role for Providing Certain Contraceptive Coverage).

The ACA contraceptives mandate became the topic of extensive implementing guidance and ongoing litigation, including claims under the Religious Freedom Restoration Act of 1993 (RFRA) (42 U.S.C. § 2000bb-1(a) and (b)). (For analysis of this guidance and litigation, see Practice Note, Contraceptives Coverage Under the ACA; see also Legal Updates, Supreme Court Strikes Contraceptives Mandate as Applied to For-Profits with Religious Beliefs, Departments Adjust Contraceptives Rules in Response to Supreme Court Cases, and No New Religious Accommodation in ACA Contraceptives Coverage Challenge.)

Expanded Exemption for Religious Objectors

The final religious beliefs regulations include several clarifications to the October 2017 interim final regulations, based on more than 56,000 comments that the Departments received in response to the interim final rules.

The final religious beliefs and moral convictions regulations do not change HRSA's discretion to require contraceptive and sterilization coverage where no recognized objection exists.

Overview of Religious Beliefs Exemption

As background, the Departments' interim final religious beliefs regulations expanded the ACA's contraceptives exemption to include nongovernmental health plan sponsors that object to coverage of some or all contraceptives or sterilization and related patient education and counseling based on their religious beliefs. As finalized, the religious beliefs exemption is available to:

Nongovernmental employers and certain non-employer entities that sponsor health plans, such as association health plans (AHPs), unions, and sponsors of multiemployer plans (see Practice Note, Association Health Plans).
Plans sponsored by nonprofit and for-profit organizations (including both privately held and publicly traded entities).

The religious beliefs exemption is also available to institutions of higher education in arranging student health plans. The exemption applies to the group health plans of objecting plan sponsors and their health insurers that provide coverage under those plans (regardless of whether the insurer has its own religious objections). As a result, a plan sponsor, insurer, and plan covered by the expanded exemption is not:

Subject to penalties for omitting contraceptives coverage from relevant benefit plans.
Required to comply with a self-certification process.

Plans sponsored by governmental employers are not covered by the religious beliefs exemption. However, a governmental employer could, based on an individual's objection, provide health coverage to the individual that does not include objected-to contraceptives coverage.

Regarding the self-certification process in the ACA contraceptives accommodation context, see Practice Note, Contraceptives Coverage Under the ACA: Self-Certification Requirements: EBSA Form 700.

For discussion of the Departments' interim final religious beliefs regulations, see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation: Expanded Exemption for Religious Employers/Plan Sponsors.

Changes Under the Final Religious Beliefs Regulations

The final religious beliefs regulations include several clarifications to the HHS portion of the tri-agency regulations, which are cross-referenced in the IRS and DOL versions of the final regulations. For example, the final regulations clarify that an entity's or individual's religious objection to some but not all contraceptives results in an exemption only to the extent of the objection. As a result, an exemption:

Only reaches the items to which an entity or individual objects.
Does not encompass contraceptive methods to which the objection does not apply.

(45 C.F.R. § 147.132(a)(1).)

From an ERISA compliance perspective, the Departments noted that:

Objecting employers that wish to exclude all or a subset of contraceptive services must make this exclusion clear in controlling plan documents.
Reductions in covered services or benefits must be timely disclosed to plan participants (29 C.F.R. § 2520.104b-3(d)).

(These ERISA standards also apply regarding the Departments' final moral convictions regulations (see Moral Convictions Exemption and Optional Accommodation).)

The final regulations also clarify that if an exemption includes a plan or coverage established or maintained by a church, convention/association of churches, a religious order, or certain related entities, the exemption applies to each employer, organization, or plan sponsor that adopts the plan (45 C.F.R. § 147.132(a)(1)(ii)).

Individual Exemption

The interim final religious beliefs regulations added an exemption for objecting individuals (see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation: Exemption for Individuals). The final regulations clarify that for an employee who claims the individual exemption, a willing employer or insurer may (if otherwise permitted) offer the employee participation in a group health insurance policy or benefit option that complies with the employee's objection. The individual exemption:

Extends to the coverage unit in which a participant is enrolled (for example, family coverage covering a participant and dependents enrolled under the plan).
Does not relieve the plan's or insurer's obligation to comply with the ACA's contraceptives mandate regarding the group health plan generally.

Updated Accommodation Procedures

As under the interim final rules, the final regulations:

Make optional the accommodation process (under the Departments' prior guidance) for objecting entities for employers and plan sponsors (see Practice Note, Contraceptives Coverage Under the ACA: Accommodation for Nonprofit and Certain For-Profit Entities).
Specify that a third-party administrator (TPA) having its own objections to complying with the accommodation process may decline to enter into (or continue) a contract in the role of a TPA for a plan that includes contraceptive coverage to which the TPA objects.

The final regulations include two sets of instructions (transitional and general) for objecting entities to revoke use of the accommodation process (26 C.F.R. § 54.9815-2713A; see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation: Optional Accommodation Process Includes Revocation Procedures). The instructions replace earlier HHS guidance addressing this issue.

Good Faith Reliance for Insurers

The final regulations also include a special rule that applies if:

An insurer reasonably and in good faith relies on an eligible entity's representation concerning its eligibility for an accommodation.
The representation is later determined to be incorrect.

(45 C.F.R. § 147.131(f).)

In this situation, the insurer is considered to comply with the applicable contraceptive requirements under governing HRSA guidelines if the insurer otherwise satisfies applicable obligations under the final regulations.

Severability Provision

The Departments finalized without change a severability clause in the interim final regulations stating that if a provision under the regulations is held to be invalid or unenforceable by its terms (or as applied to any person or circumstance), the provision will:

Be severable.
Not affect the remainder of the regulations or how the provision applies to other individuals who are not similarly situated.

(45 C.F.R. § 147.133(d).)

Effective Date of Religious Beliefs Regulations

The final religious beliefs regulations are scheduled to be published in the Federal Register on November 15, 2018, and will be effective 60 days after this publication date.

Moral Convictions Exemption and Optional Accommodation

The Departments' interim final moral convictions regulations added an exemption and optional accommodation to the ACA contraceptives rules for entities and individuals that object to contraceptives based on sincerely held moral convictions. The final regulations adopted the moral convictions exemption and accommodation with certain clarifications that reflect more than 54,000 comments the Departments received on the interim final rules.

Overview of Moral Convictions Exemption

The moral convictions regulations apply to nongovernmental employers that sponsor group health plans and object to coverage of some or all contraceptives or sterilization (and related patient education and counseling) based on sincerely held moral convictions. This includes group health plan and related health insurance coverage for plan sponsors that are either:

Nonprofit organizations.
For-profit entities that have no publicly traded ownership interests.

The scope of the for-profit entities rule is narrower than under the religious beliefs exemption, which extends to for-profit entities whether they are closely held or publicly traded. In their interim final moral convictions regulations, the Departments sought comments on whether publicly traded entities should be included in the moral convictions exemption. In finalizing these regulations (and based on comments received), the Departments concluded that there was not a similar probability that publicly traded (as opposed to closely held) for-profit entities with non-religious moral objections to contraceptive coverage may exist and require eligibility for a moral convictions exemption.

A non-employer plan sponsor that is otherwise a nonprofit organization or privately held for-profit entity (for example, a union or a multiemployer plan) is eligible for the moral convictions exemption. An AHP could also invoke the moral convictions exemption, assuming the plan sponsor is a nonprofit organization or privately held for-profit (see Practice Note, Association Health Plans).

However, the moral convictions exemption is not available to plans of governmental employers. (The Departments noted in this regard that they had not yet been sued by a governmental entity that objected to the ACA's contraceptives mandate based on non-religious moral convictions.)

Changes Under the Final Moral Convictions Regulations

Among other changes, the Departments' final moral convictions regulations clarify that:

An entity's or individual's requisite moral objection to some, but not all, contraceptives results in an exemption only to the extent of the objection (so that the exemption reaches only the items to which the entity or individual objects, and not contraceptive methods to which the objection does not apply).
The exemption for higher education institutions applies to nongovernmental entities (45 C.F.R. § 147.133(a)(1)(ii)).

Exemption for Individuals; Optional Accommodation

An individual exemption similar to the one under the religious beliefs exemption applies for individuals who object to coverage or payments for some or all contraceptives based on the individual's sincerely held moral convictions. In finalizing the moral convictions regulations, the Departments clarified that, where an employee claims the moral convictions exemption, a willing insurer and employer may (if otherwise allowed) offer the employee participation in a group health policy or benefit option that satisfies the employee's objection (45 C.F.R. § 147.133(b)). However, this individual exemption cannot be used to require an insurer or employer to provide coverage that omits contraception.

The Departments also finalized without change a provision under the interim final moral convictions regulations that made available a voluntary accommodation process for entities that are exempt on the basis of moral convictions (see Practice Note, ACA Contraceptives: Religious Beliefs/Moral Convictions Exemption and Accommodation: Exemption for Individuals; Optional Accommodation).

Effective Date

The final moral convictions regulations are scheduled to be published in the Federal Register on November 15, 2018, and will be effective 60 days after this publication date.

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