What does the Affordable Care Act’s Contraceptive-Mandate Controversy Mean for your Benefits Plan?

This past summer, the U.S. Supreme Court decided a monumental case regarding the Affordable Care Act’s (ACA) contraceptive mandate, with potential implications for employers across the nation offering employee health benefits. 

Though the Supreme Court issued a final ruling, much debate has continued regarding the rights of nonprofit and for-profit, religious-based organizations, specifically in complying with ACA’s contraceptive mandate. While the nation continues to wait for final guidance from the government, many organizations are left wondering how the recent Supreme Court case impacts their employee-benefits plan as they finalize benefit strategies for 2015.

The case was Burwell vs. Hobby Lobby and at issue was whether or not the Religious Freedom Restoration Act (RFRA) of 1993 protects a company from complying with a government mandate that is opposed by the owner, or owners, of the company on religious grounds. More specifically, the family that owns and operates the Hobby Lobby Corporation argued that as an organization that seeks to operate the company based on the family’s Christian beliefs, ACA’s contraceptive mandate was unduly burdensome to their free exercise of religion. 

ACA’s contraceptive mandate requires non-grandfathered employers with more than 50 full-time employees to provide female health-care-plan members with coverage for more than 20 forms of FDA-approved birth control, including oral, injectable, and implantable methods, with no member cost share. This means that the employer, in the case of a self-funded benefit plan, would pay for a member’s contraception in-full. 

The ruling by the Supreme Court determined that requiring closely held corporations to pay for contraceptive coverage, as required by ACA, violates RFRA. The ruling further exempted religious-based organizations from complying with the contraceptive mandate. The ruling in Burwell vs. Hobby Lobby is the first case of the Supreme Court extending religious-freedom protections to what Justice Ruth Bader Ginsburg called the “commercial, profit-making world.” 

In response to the Supreme Court’s determination, the Obama Administration stood firm on its position that it is important for employers to offer comprehensive health coverage for women, and to ensure that women across the nation have equal access to health-care services. 

As a sort of compromise, and to ensure coverage for female health-plan members whose employers are opposed to the idea of paying for contraceptive coverage, the Obama Administration suggested that insurance carriers, and third-party administrations (TPAs), should pay for the contraceptive coverage in lieu of the employer. This, the administration suggested, would relieve the religious-based organization of the need to pay for coverage that it opposed on moral grounds, without compromising ACA’s position on women’s health. 

For TPAs that do not assume the financial risk associated with the plans that they administer, the idea of paying for contraceptive coverage would have meant a paradigm shift in the self-funding industry. The government quickly clarified that in the case of self-funded plans, the government would ultimately reimburse the plan for the cost of contraceptive coverage. Insurance carriers, on the other hand, would absorb the cost of coverage.

The administration proposed that in order to be eligible for the exemption that would shift the cost of coverage to its plan administrator, an organization would need to file Form 700, a two-page form that certifies that the organization is a religious nonprofit organization that opposes providing some or all of the services and supplies required by ACA’s contraceptive mandate. 

Many religious-based organizations, such as private universities and nonprofits, immediately voiced their opposition to the requirement to complete Form 700 in order to receive the mandate exemption, on the basis that the requirement to complete the form itself inherently violated their religious freedoms. In response, the Obama Administration recently proposed that both nonprofit and for-profit organizations that did not want to complete Form 700, simply notify the U.S. Department of Health and Human Services (HHS) that they have a religious objection to offering contraceptive coverage and provide the name of their TPA, if self-funded. HHS would then notify the TPA of the employer’s decision, and would reimburse the TPA for the health plan’s incurred contraceptive costs. 

This proposal still did not alleviate the overarching concern for opposing corporations, however. For many religious-based organizations, the real opposition is not in the payment for contraceptives, but in acting in any capacity as part of the delivery system of contraceptive methods to women in the United States. Such organizations continue to maintain that their religious rights are burdened by any mandates that make them complicit in the contraceptive delivery channel, regardless of what entity is paying for coverage. In response to these unresolved concerns, religious-based organizations and their health-plan administrators are left waiting for further clarification and guidance.

As the contraceptive-mandate controversy continues to unravel new elements of ACA’s compliance requirements, the unfolding events raise more and more questions regarding the rights of employers to customize employee-benefits solutions post ACA-implementation. 

If your organization is philosophically opposed to the contraceptive mandate, talk to your legal counsel to determine what recourse you may have to exclude coverage for contraceptive items from your health and prescription-drug benefit plan moving forward. While the nation continues to wait for further clarity regarding possible organizational exemptions, take the time to consider your organization’s philosophy regarding offering employee benefits so that you can be prepared to take appropriate action when further guidance is issued.        

Vanessa Flynn is vice president, client services for the POMCO Group.