from the Arthur J. Gallagher Co.

On August 22, 2014, the Departments of Health and Human Services, Labor, and Treasury (the “Agencies”) released an interim final regulation amending prior guidance on accommodations for nonprofit eligible organizations with religious objections to compliance with the requirement that non- grandfathered health plans provide coverage for contraceptive services under the Patient Protection and Affordable Care Act (“PPACA”) (often called “the contraceptive mandate”). In addition, the Agencies released a proposed regulation seeking comments on a means for for-profit, closely-held corporations with religious objections to providing coverage for some or all contraceptive services to obtain an accommodation in a manner similar to the accommodation currently available for nonprofit eligible organizations with religious objections. A fact sheet on the rules and a notice of the revision of EBSA Form 700 (which can be used to obtain the accommodation) were also released.

The Alternate Accommodation under the Interim Final Regulation

Background

The interim final regulation responds to the United States Supreme Court’s interim ruling in Wheaton College v. Burwell, which granted an injunction permitting Wheaton College to refrain from compliance with the contraceptive mandate. Wheaton College challenged the requirement in the July 2013 contraceptive coverage regulations that an eligible organization desiring an accommodation from the contraceptive mandate must send EBSA Form 700 to its insurance carrier or third party administrator (“TPA”). Under the Court’s order, the Agencies could not enforce certain PPACA provisions and related regulations under the contraceptive mandate against Wheaton College if it informed the Department of Health and Human Services (“HHS”) in writing that: (1) it is a nonprofit organization that holds itself out as religious and that it has religious objections to providing contraceptive services. Thus, Wheaton College was not required to use EBSA Form 700 or send a copy of the completed form to its health insurance carriers or TPAs to be eligible for injunctive relief. The interim final regulation provides an alternative means to obtain the accommodation in light of the Supreme Court’s ruling in Wheaton College.

Interim Final Regulation

Under prior guidance, nonprofit religious employers objecting to some or all contraceptives required to be covered under PPACA could obtain an accommodation by providing a self-certification using EBSA Form 700. The interim final regulation provides an alternative accommodation for such employers, which would not require those organizations to provide a copy of the self-certification to their TPAs or their insurance carriers, as applicable. Instead, under the alternative accommodation, an “eligible organization” may simply inform HHS in writing of its religious objection. HHS released a form that can be used for this purpose, but the form is not mandatory. However, the notice must include the following information: (1) the name of the eligible organization; (2) the basis on which it qualifies for an accommodation; (3) a statement that the eligible organization objects based upon religious beliefs to providing some or all contraceptive services required under PPACA; (4) a list of the contraceptive services to which the organization objects, if not all contraceptive services are objectionable; (5) the plan name and type (e.g., student, church); and (6) contact information for the eligible employer’s TPA(s) or health insurance carrier(s), as applicable. If HHS receives the notice for a fully insured plan, it will inform the insurer named in the notice that the insurer now has the obligation to provide coverage for contraceptive services. If HHS receives the notice on behalf of a self-insured plan, HHS will notify the Department of Labor (“DOL”), which will then designate the TPA as the ERISA plan administrator for providing contraceptive services. Previously, eligible employers objected to using EBSA Form 700 based upon the concept that they were themselves authorizing their TPAs to provide contraceptives by forwarding EBSA Form 700, but the DOL notification to the TPA is intended to become the plan document under which the TPA is authorized to cover contraceptives in order to avoid this issue. The DOL asserts that it has broad authority to designate the TPA as the plan administrator for these purposes under ERISA. Unfortunately, the interim regulation does not clarify how this designation impacts TPAs for non-ERISA plans. The Accommodation for Closely-Held, For-Profit Corporations under the Proposed Regulation

Background

The proposed regulation (which is actually a Notice of Proposed Rule Making) responds to the United States Supreme Court’s ruling in Hobby Lobby v. Burwell, which held that the contraceptive mandate violates the rights under the Religious Freedom Restoration Act of closely-held, for-profit corporations with religious objections to providing some or all contraceptives. The proposed regulation provides a possible accommodation for for-profit, closely-held corporations and would be similar to the accommodation noted above for nonprofit eligible organizations.

Proposed Regulation

The proposed regulation would expand the definition of “eligible organization” to include a closely-held, for-profit entity with owners who object to providing some or all contraceptive services required under PPACA based upon sincerely held religious beliefs. The proposed regulation does not attempt to define “closely-held” entity, but instead asks for comments on a possible definition. One possible definition outlined in the proposed regulation would define a qualifying closely-held entity as “an entity where none of the ownership interests in the entity is publically traded and where the entity has fewer than a specified number of shareholders or owners.” Another possible definition would include a reference to a maximum number of owners or a minimum concentration of ownership. That second definition would also include a requirement that the entity not be publically traded. The Agencies seek additional comments on two other notable potential changes, which involve the structure of payments for coverage and possible proof of for-profit owners’ sincere religious beliefs. Specifically, the Agencies seek comments on the proposal for TPAs to either provide coverage or arrange for an insurance carrier to provide coverage for contraceptives in a manner similar to the accommodation in place for nonprofit entities. Also, the Agencies seek comments on whether the Agencies should require documentation of the decision-making process involved when determining whether providing coverage for some or all contraceptive services violates sincerely held religious beliefs to determine if that process is in accordance with the organization’s governing structure. The comment period closes on October 21, 2014. Comments should be sent to the Office of Information and Regulatory Affairs, Attention: Desk Officer for the Employee Benefits Security Administration either by Fax to (202) 395-5806 or by email to oira_submission@omb.eop.gov.

The intent of this analysis is to provide general information regarding the provisions of current healthcare reform legislation and regulation. It does not necessarily fully address all your organization’s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Your organization’s general counsel or an attorney who specializes in this practice area should address questions regarding specific issues. https://ajg.adobeconnect.com/_a815130238/hcr_090414a/