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From Health Law Daily, June 28, 2013

Advance release of HHS final rule clarifies definition of “religious organization” for exception to contraception mandate

By Sheila Lynch-Afryl, JD, MA

HHS, the Department of Treasury, and the Department of Labor have released an advance copy of a final rule clarifying the religious employer exemption to the contraception mandate. The rule finalizes the proposed definition of “religious employer” for purposes of the exemption in response to comments by religious organizations.

HHS Secretary Kathleen Sebelius said, “Today’s announcement reinforces our commitment to respect the concerns of houses of worship and other non-profit religious organizations that object to contraceptive coverage, while helping to ensure that women get the care they need, regardless of where they work.” According to HHS, the new regulations strike a balance “between respecting the religious considerations raised by non-profit religious organizations and increasing access to important preventive services for women.”

Background. Sec. 2713 of the Public Health Service Act requires coverage without cost sharing of certain preventive health services, including women’s preventive health services, by group health plans and health insurance issuers. Under current regulations, group health plans established or maintained by certain religious employers are exempt from the otherwise applicable requirement to cover contraceptive services.

Religious employer exemption. Regulations released in 2012 (77 FR 8725) specified that, for purposes of this exemption, a religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a nonprofit organization. HHS also issued guidance in 2012 establishing a temporary one-year safe harbor from enforcement of the contraceptive coverage requirement for group health plans established or maintained by certain nonprofit organizations with religious objections to contraceptive coverage.

The agencies sought to simplify the definition of “religious employer” by eliminating the first three prongs and clarifying the fourth prong of the definition. An employer that is organized and operates as a nonprofit entity and is referred to in sec. 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code of 1986 is considered a religious employer for purposes of the religious-employer exemption. These amendments were intended to eliminate any question as to whether group health plans of houses of worship that provide educational, charitable, or social services to their communities qualify for the exemption.

The agencies noted in response to comments that the simplified definition does not expand the universe of religious employers that qualify for the exemption beyond what was intended in the 2012 final regulations; rather, it eliminates any perceived potential disincentive for religious employers to provide educational, charitable, and social services to their communities.

Accommodations. The final rule also establishes accommodations for health coverage established, maintained, or arranged by other nonprofit religious organizations, such as nonprofit religious hospitals and institutions of higher education, that object to contraception coverage. After self-certifying, such organizations are not required to contract, arrange, pay, or refer for contraceptive coverage. The issuer of health insurance must then expressly exclude contraceptive coverage from the eligible organization’s group health insurance coverage and notify plan participants that it provides separate payments for contraceptive services at no cost.

In addition, for any plan year to which an accommodation is to apply, a health insurance issuer providing separate payments for contraceptive services pursuant to the accommodation, or a third-party administrator arranging or providing such payments, must provide written notice to plan participants and beneficiaries in insured or self-insured group health plans.

An accommodation applies similarly to student health insurance coverage arranged by an eligible organization that is an institution of higher education.

Additional documents. The agencies stated that two guidance documents are being released contemporaneously with the final regulations: (1) a guidance extending the temporary safe harbor for plan years beginning on or after August 1, 2013, and before January 1, 2014; and (2) a self-certification form to be executed by an organization seeking to be treated as an eligible organization for purposes of an accommodation under these regulations.

Effective dates. The final rule will apply to group health plans and health insurance issuers for plan years beginning on or after January 1, 2014, except that the amendments to the religious employer exemption will apply to group health plans and health insurance issuers for plan years beginning on or after August 1, 2013.

The final rule will be published in the Federal Register July 2.

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