As explained in an earlier post, the 2010 health care reform law requires health plans to provide women’s preventive care and services without cost sharing. Regulations issued August 1, 2011 included all FDA-approved contraception for women in the definition of women’s preventive care and services. That includes abortion and abortifacient drugs (like the so-called “morning-after” pill). The regulations were effective for the first plan year beginning on or after August 1, 2012. The government released proposed regulations on January 30, 2013, that would amend those regulations.

Religious Employer Exemption. The regulations exempted “religious employers.” A religious employer was defined as an organization (1) for which the inculcation of religious values is its purpose, (2) that primarily employs and serves persons who share its religious tenets, and (3) that is a nonprofit organization described in Internal Revenue Code sections 6033(a)(1) and 6033(a)(3)(A)(i) or (iii). However, after receiving public comments, the government has decided that definition is too narrow. Therefore, the government proposes relaxing the definition by eliminating the first three requirements, so that a religious employer is one that is organized an operates as a nonprofit entity referred to in Code section 6033(a)(3)(A)(i) or (iii) – i.e., referring to churches, their integrated auxiliaries, and conventions or associations of churches as well as the exclusively religious activities of any religious order. Thus, the many religious entities that serve the needs of persons outside the entities’ own faith and employ individuals who do not necessarily share the entities’ religious tenets will be able to meet the proposed revised definition of religious employer.

Employer Objecting on Religious Grounds. Many organizations that do not meet the definition of religious employer nevertheless oppose contraception (or specific contraception like abortion) for religious reasons.  Last February, Health and Human Services (HHS) issued guidance providing a temporary enforcement safe harbor for certain employers with respect to the requirement to cover contraceptive services. That guidance allowed an additional year for a plan maintained by a non-profit organization whose plan consistently does not covered contraceptive services for religious reasons at any point from February 10, 2012, to comply with the requirement to do so. HHS issued a bulletin in August 2012 clarifying the February 2012 guidance. Now, the government proposes additional relief for such employers – permitting them to avoid covering contraceptive care under their own group health plans where the insurer (for full-insured plans) or third-party administrator (for self-funded plans) arranges for individual policies covering contraceptive care. The insurers issuing such policies would, in turn, be eligible to offset the cost of providing that specific coverage by claiming an adjustment in the Exchange fees they must pay.

Employers wishing to comment on these proposed regulations have 60 days from the date the proposed rule is published in the Federal Register to do so.