If closely held companies want to nix their employees' insurance coverage of contraceptives, they can't do so in secret.
The U.S. Labor Department announced Thursday that in the wake of the U.S. Supreme Court's decision in Burwell v. Hobby Lobby Stores, employers must formally notify workers if they remove birth-control methods from their lists of covered prescriptions or procedures. The change comes as Congress appears deadlocked on a bill to restore no-cost insurance coverage in the Patient Protection and Affordable Care Act.
“We support Congressional efforts to address this issue,” a senior Obama administration official said. “In the meantime, we are making clear that if a corporation like Hobby Lobby drops coverage of contraceptive services from its health plan, it must do so in the light of day by letting its workers and their families know.”
The Labor Department rule says companies have up to 60 days to tell employees after making such a change.
The Supreme Court ruled 5-4 on June 30 that family-run companies and other “closely held” corporations can exercise religious beliefs. That meant the Affordable Care Act cannot force those companies to violate those beliefs by compelling the health plans they sponsor to provide all forms of Food and Drug Administration-approved contraceptives with no out-of-pocket costs for members.
The court's decision was cheered by some observers as a victory for religious freedom, but it left many unanswered questions, including what a closely held company is and whether cuts to birth-control services would have to be announced to employees.
“You don't want anyone going to fill a prescription and then finding out at the pharmacy counter that this is no longer covered under the plan,” said Amy Gordon, a partner in benefits law at McDermott Will and Emery in Chicago.
Gordon said she has already been approached by companies that decided they fit the definition of a “closely held” company and want to cancel coverage for some or all of the 20 forms of birth control approved for use by the FDA. The Labor Department posting confirmed her suspicion that such changes would be considered “material reductions in covered services,” which must be disclosed.
The Hobby Lobby case targeted only four forms of birth control, but lawsuits challenging requirements to cover all forms of birth control are still pending in court. A separate spate of lawsuits from not-for-profit organizations is challenging the adequacy of a federal accommodation to the policy for religious objections, which allows an outside entity to provide contraceptive coverage.
Meanwhile, at least 28 states have laws on the books that require health plans to cover the full range of contraceptive drugs and devices if they offer prescription drugs in their plans, according to an analysis by the Guttmacher Institute. Those laws appear to remain in place, attorneys say, because the Hobby Lobby decision applied only to the federal regulation.
But it's not clear that companies with religious objections will follow them. On Monday, Connecticut Sen. Richard Blumenthal wrote a letter to Hobby Lobby's owners requesting that the company comply with his state's law requiring coverage of contraceptives.
“Given our history of respect for individual rights and Connecticut's strong and clear public policy protecting access to all legally approved contraceptives as well as pending congressional legislation, I urge you to ensure that any health insurance offered by Hobby Lobby to Connecticut employees comply with our state mandate,” Blumenthal wrote.
Company officials have not responded publicly to the letter.
New York is another state that requires insurance coverage of contraceptives. But that didn't stop state officials there from unveiling a new bill on Thursday called the Reproductive Rights Disclosure Act, which would require employers to provide 90 days' prior notice before canceling birth-control coverage.
Asked why state officials would pass a law regulating something that is illegal in the state, an official with the state attorney general's office said the existing law requiring coverage may eventually be challenged in court. If the coverage requirement is struck down, he said, the new law's requirement for prior notice would be important to have in place.
Joe Carlson writes for Modern Healthcare, a sister publication of Business Insurance.