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February 6, 2013

Proposal would expand definition of "religious employer" exempt from contraceptive coverage mandate

By Michelle L. Oxman, JD, LLM

HHS, the Department of Labor, and the Department of the Treasury have jointly published proposed rules that would expand the definition of "religious employer" for purposes of exemption from the requirement to cover contraception as a preventive service for women (Proposed Rule, 78 FR 8456, February 6, 2013). The definition would include any organization that meets the requirements of section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code. The requirements of the previous Final rule concerning the purpose of the organization to inculcate religious values and employment of and services to individuals who accept the tenets of the religion would be deleted. The requirement to cover contraceptive services would not apply to religious employers, as defined. In addition, "eligible organizations" could issue certifications, to be provided to the health insurance issuers that certified that they: (1) are opposed to coverage of some or all forms of contraception on religious grounds; (2) hold themselves out as religious organizations; and (3) are organized and operated as nonprofit entities. On receipt of the certification, the group health insurance issuer would offer separate contraception coverage without payment of any premium, deductible, or other cost sharing.

Prior rulemaking and safe harbor. This proposed rule is the latest development in an ongoing controversy in which opponents of contraception, both religious and secular, objected to this requirement of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148). The Final rule published in February, 2012 would have limited the exemption to organizations whose purpose is the inculcation of religious values and who primarily employ and serve individuals who share their religious beliefs. A safe harbor delayed enforcement against religious organizations until August 2013. Meanwhile, there have been many legal challenges to the rule by both religious and secular entities.

Accommodations. The proposed rule expressly would protect religious institutions of higher education, while assuring that contraception coverage is available to students and employees. The cost to insurers would be offset by a credit in the user fee for issuers of qualified health plans offered through the federally facilitated health insurance exchanges. Commercial entities would not be protected, just as they are not exempt from other employment-related requirements. In multi-employer plans, each employer would have to qualify as an eligible organization.

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