Agencies Issue Final Rules on Contraceptive Coverage

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The Department of Health and Human Services (HHS), along with the Departments of Labor and the Treasury (collectively, “the Departments”), recently issued final regulations clarifying that certain closely held for-profit entities are entitled to the same “accommodation” that allows non-profit religious organizations to opt out of the requirement to provide contraceptive coverage.

For plan years beginning on or after August 1, 2012, non-grandfathered group health plans must cover certain preventive health services for women with no cost-sharing, including FDA-approved contraceptive methods and counseling.

Group health plans maintained by religious employers, such as churches, are exempt from the requirement to provide contraceptive coverage.  Religiously affiliated employers, such as schools, hospitals and charities, are not exempt.  However, an “accommodation” is available to these employers if they:

  • Oppose providing coverage of some, or all, of the required contraceptive services based on religious objections;
  • Are organized and operate as a non-profit entity;
  • Hold themselves out as a religious organization; and
  • Self-certify that they meet the above criteria either by completing EBSA Form 700 or providing written notice to HHS.

In response to the U.S. Supreme Court’s ruling in Burwell v. Hobby Lobby, the Departments have now issued final regulatory guidance stating that a closely held for-profit entity with religious objections may also claim an “accommodation” if it:

  • Is not a non-profit entity;
  • Has no publicly traded ownership interests; and
  • More than 50 percent of the value of its ownership interest is owned directly or indirectly by five or fewer individuals.

To be eligible for the “accommodation,” the for-profit entity’s governing body (e.g., board of directors) must adopt a resolution establishing that it objects to covering all or some contraceptive services based on the owners’ sincerely held religious beliefs.  The entity must then self-certify that it meets the criteria for an “accommodation” by using either Form 700 or providing written notice to HHS.