On Feb. 1, the Departments of Health and Human Services, Labor, and the Treasury released proposed regulations on how religious organizations should apply the contraceptive coverage requirements under the Patient Protection and Affordable Care Act. The agencies previously had released guidance exempting religious employers from the requirement. To meet this exemption, religious employers were required to:
* Have the inculcation of religious values as its purpose.
* Primarily employ persons who share its religious tenets.
* Primarily serve persons who share its religious tenets.
* Be a nonprofit organization described in Section 6033(a)(1) and 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code.
Many religious organizations intending to take advantage of the religious employer exemption raised concerns that they would not qualify because their purposes extended beyond the inculcation of religious values, or because they employed or served people with different religious beliefs.
Thus, the new proposed regulations eliminate the first three criteria of the religious employer exemption. To meet the religious employer exemption under the proposed regulations, a religious employer must only be a nonprofit organization described in Code Section 6033(a)(3)(A)(i) or (iii) (relating to churches, their integrated auxiliaries and conventions or associations of churches, as well as the exclusively religious activities of any religious order). In the preamble to the proposed regulations, the agencies state that "there no longer would be any question as to whether group health plans or houses of worship that provide educational, charitable, or social services to their communities qualify for the exemption."
The proposed regulations also establish accommodations for health coverage established or maintained by "eligible organizations" (or arranged by eligible organizations that are religious institutions of higher education) with religious objections to providing contraceptive coverage. To qualify for an accommodation under the proposed regulations, eligible organizations are ones that:
* Oppose providing coverage for some or all of the contraceptive services required under PPACA on account of religious objections.
* Organize and operate as nonprofit entities.
* Hold themselves as religious organizations.
* Self-certify that they satisfy the first three criteria and specify the contraceptive services for which they object to providing coverage.
Under the proposed regulations, an eligible organization would not be required to contract, arrange, pay or refer for any contraceptive coverage to which it objects on religious grounds. Participants in group health plans established or maintained by eligible organizations would receive contraceptive coverage through separate individual health insurance policies, without cost-sharing or additional premiums.
Also under the proposals, the process through which such individual health insurance coverage would be established is different based upon whether the eligible organization's group health plan is fully insured or self-insured.
For fully insured plans, an eligible organization would provide its self-certification to a health insurance issuer, which would then automatically enroll plan participants and beneficiaries in separate individual health insurance policies that cover the recommended contraceptive coverage. The organization would have no role contracting, arranging, paying or referring for this separate contraceptive coverage. In addition, such coverage would be offered to plan participants and beneficiaries without the imposition of any cost-sharing requirement, premium, fee,or other charge. In the preamble to the proposed regulations, the agencies state that issuers would generally find that providing contraceptive coverage is cost-neutral because they would be insuring the same set of individuals under both policies and would experience lower costs from improvements in women's health and fewer childbirths.
With regard to self-insured plans, the agencies are considering three alternative approaches for providing participants and beneficiaries with contraceptive coverage at no additional cost, while protecting the eligible organizations from having to contract, arrange, pay or refer for such coverage. Under all three approaches, if the self-insured plan of the eligible organization uses a third-party administrator, an eligible organization would provide the TPA with a copy of its self-certification, and the TPA then automatically would arrange separate individual health insurance policies for contraceptive coverage from an issuer providing such policies.
In addition, under all three approaches, a health insurance issuer that provides individual health insurance policies for contraceptive coverage for plan participants and beneficiaries at no additional cost would be able to offset the costs of providing such coverage by claiming an adjustment in federally facilitated exchange user fees that would reduce the amount of such fees for the issuer.
The agencies have solicited comments on the three proposed approaches for self-insured group health plans established or maintained by eligible organizations.
Contributing Editor Kate Bongiovanni is an associate in the tax section of Smith, Gambrell & Russell, LLP. She can be reached email@example.com.
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