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From Health Reform WK-EDGE, November 20, 2018

Updated moral, religious exemptions permit some employers to deny ACA contraception coverage

By Anthony H. Nguyen, J.D. and Patricia K. Ruiz, J.D.

In a carve-out of federal requirements under the Affordable Care Act (ACA) (P.L. 111-148) that essential health benefits must include coverage of contraception at no charge to consumers, the Trump Administration has issued new regulations that would exempt nonprofit organizations, small businesses, and individuals with non-religious moral convictions opposed to contraceptive services from offering employees health plans with those services. Another set of regulations finalizes, with technical and clarifying changes, an interim final rule expanding protections for sincerely held religious objections of certain entities and individuals. Notably, the final rule extends the exemption to publicly held for-profit entities. The rule also maintains a previously created accommodation process permitting entities with certain religious objections to voluntarily continue to object while covered persons receive contraceptive coverage or payments arranged by their health issuers or third party administrators.

Moral objections. The advance release of a final rule set to publish in the Federal Register November 15, 2018, notes that the moral convictions exemptions apply to nonprofit organizations and to closely held businesses, as well as to institutions of education, health insurance issuers serving exempt entities, and individuals. Non-federal government entities or publicly traded businesses are not exempted under the final rule. Various changes were made in the new moral objections final rule to clarify the scope of the exemptions detailed in the previously issued interim final rule (see New regulations provide opportunity for moral objection to contraceptive coverage, October 18, 2017, and Contraception coverage exemptions extended for objecting employers on religious, moral grounds, October 11, 2017).

According to the final rule, moral convictions are protected in ways similar to religious beliefs. The convictions must be: (1) deeply and sincerely held; (2) purely ethical or moral in source and content; (3) ones that impose a duty; and (4) occupy a place "parallel to that filled by…God" in traditionally religious persons to the point where it could function as a religion. HHS stated that the ACA did not require contraceptive coverage in health insurance.

Clarification of moral exemption language. Based on public comments on the interim final rule, HHS clarified the exemption language to apply to (1) group health plans established or maintained by an objecting organization or (2) health insurance coverage that is offered or arranged by an objecting organization. The final rule also clarified that the objecting organization’s moral objection is related to either its establishing, maintain, providing, offering, or arranging of (1) the contraceptive coverage or payments for contraceptive services or (2) association with either a plan, issuer, or third party administrator that provides or arranges for that coverage or payment.

According to HHS, these rules affect a small fraction of the women in the U.S. HHS noted that contraceptive coverage guidelines where no religious or moral objection exists were still in place. Additionally, HHS stated that the new final rule did not change the Health Resources and Services Administration’s discretion to include contraceptives in the women’s preventive services guidelines for other entities.

Litigation related to the prior interim final rules are pending before appellate courts, as federal courts in California and Pennsylvania had granted nationwide injunctions because of the lack of public comment period and the scope of the exemptions "contradicted" the ACA.

Expansion of eligibility for religious exemptions. The advance release of the religious exemption final rule, which is scheduled to publish in the Federal Register on November 15, 2018, expands religious exemptions for group health plans and health insurance coverage of entities and individuals with sincerely held religious beliefs opposed to coverage of some or all contraceptive or sterilization methods encompassed by HRSA guidelines.

The types of organizations and individuals for whom the exemptions are provided include: (1) non-governmental plan sponsors; (2) nonprofit organizations; (3) for-profit entities (including both closely held and publicly traded); (4) institutions of higher education; (5) insurance issuers, to the extent that they provide a plan to otherwise exempt entities; and (6) individuals whose employers and issuers are willing to provide them a plan compliant with the individuals’ beliefs. The final rule adds language to clarify that the exemptions only apply to non-governmental entities, including as exemptions apply to institutions of higher education.

Maintenance of accommodation. The rule finalizes provisions of the interim final rule maintaining option of choosing the accommodation process for entities that qualify for the exemption. It also makes technical changes to the accommodation regulations governing when an entity that was using or will use the accommodation can revoke the accommodation and operate under the exemption. This transitional rule allows entities currently using the accommodation to revoke it and use the exemption by giving 60 days’ notice. The final rule also modifies the interim final rule, to add provisions that existed in the rules prior to the interim final rule.

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