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Supreme Court ruling will test range of health reform's contraceptive mandate

More employers may drop some coverage

Supreme Court ruling will test range of health reform's contraceptive mandate

The U.S. Supreme Court's pivotal ruling last month that the federal government cannot force family-owned, private employers to directly provide contraceptive coverage could have wider reaching implications for private companies and benefits administrators.

Benefits lawyers, consultants and third-party administrators have received numerous inquiries from self-funded employers asking whether they, too, can discontinue providing contraceptive coverage in light of the high court's June 30 decision in Burwell v. Hobby Lobby Stores Inc.

“You're only limited to your imagination what the full impact of this ruling will be in time,” said Amy Gordon, a partner at McDermott Will & Emery L.L.P. in Chicago. “The ruling addressed closely-held, for-profit corporations but did not define what is meant by "closely-held,' nor did it preclude non-closely-held corporations from bringing their own action and exerting the same freedom of religion objection.”

That 5-4 high court ruling said the Religious Freedom Restoration Act of 1993 allows closely-held, for-profit corporations to avoid the Patient Protection and Affordable Care Act's requirement to provide coverage for certain contraceptives if such a requirement conflicts with the owners' religious beliefs against birth control.

Less than a week later the Supreme Court granted a rare emergency injunction to Wheaton College, a Christian college in the Chicago suburbs, that it did not have to sign a form indicating it objects to the contraceptive coverage mandate. That injunction, along with guidance issued by the U.S. Department of Labor late last week, could make dropping ACA-mandated contraceptive coverage even easier for employers, legal experts say.

Meanwhile, Senate Republicans blocked an effort last week to pass a new law to essentially override the Supreme Court decision that allows some for-profit companies to deny health insurance coverage for birth control. Democrats had needed 60 votes to consider legislation that would protect the birth control mandate in the Affordable Care Act but got 56.

The high court's Hobby Lobby decision came in a case involving the Oklahoma City-based chain of craft stores and two other companies. The court ruled that closely held, for-profit corporations were covered by a 1993 law aimed at protecting the free exercise of religion and that the birth control mandate was an improper burden on the faith of Hobby Lobby's owners.

“The plain terms of RFRA (Religious Freedom Restoration Act) make it perfectly clear that Congress did not discriminate this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs,” the majority of the court said in their written opinion. “Protecting the free-exercise rights of closely-held corporations thus protects the religious liberty of the humans who own and control them.”

Justin T. Curley, an attorney at Seyfarth Shaw in San Francisco, said the potential effect of the court's decision is “huge'' because the opinion “left open the potential for other religious-based objections to ACA by closely held for-profit companies, as well as for the potential for such objections to be asserted by companies that are not closely held.”

When the health care reform law was passed in 2010, an automatic exemption to the contraception mandate was granted to religious organizations as defined under Internal Revenue Service Code Section 6033. Other organizations that objected to the mandate were required to self-certify.

However, the Wheaton College case essentially removed the obligation of employers that don't automatically qualify for the exemption from the ACA's contraception mandate to self-certify, Ms. Gordon said.

Since the Hobby Lobby decision, Ms. Gordon said she has received several inquiries from clients asking if they could drop contraceptive coverage.

“I have some employers that never would have considered taking this out of their plan before the ruling,” she said. “But now they are asking, "What if other competing employers drop it?'”

A third-party administrator executive who asked not to be identified said he fielded numerous calls from employers in the wake of the Hobby Lobby decision asking if they might qualify for an exemption from contraceptive coverage.

The labor department's issuance of guidance in the form of frequently asked questions regarding contraceptive coverage so quickly following the Hobby Lobby decision suggests the department already has received a number of inquiries, said Sharon Cohen, a principal at Buck Consultants at Xerox in Washington.

“I think it's the first step in the government acknowledging changes that will be made to existing guidance in light of the Supreme Court's decision,” she said.

One of the labor department's questions asks: “My closely held for-profit corporation's health plan will cease providing coverage for some or all contraceptive services mid-plan year. Does this reduction in coverage trigger any notice requirements to plan participants and beneficiaries?”

The department's answer could make it easier for employers to drop contraceptive coverage based on religious grounds, Ms. Gordon said.

“Under Subsection 2715 of the ACA, if there's a material change in coverage that is impacted in the summary of benefit coverages, you actually need to notify the participants 60 days in advance, and this is citing the normal ERISA material change in benefits rule, which gives the plan within 60 days of the change to notify participants,” Ms. Cohen said. “That means that an employer can terminate contraceptive coverage tomorrow, notify plan participants in mid-September, and still be in compliance.”

However, both Hobby Lobby and Wheaton rulings may apply only to self-insured plans if states are successful in adding contraceptive coverage to their mandated benefits, experts say.

Already, the New York state attorney general is proposing a bill the Reproductive Rights Disclosure Act that would do just that.

New York is one of at least 28 states that already require insured 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 nonprofit Guttmacher Institute, which supports reproductive health issues. Those laws appear to remain in place, attorneys say, because the Hobby Lobby decision applied only to the federal regulation.

“No woman should have her personal health care decisions dictated by the religious beliefs of her boss,” New York Attorney General Eric T. Schneiderman said in a statement. “... In the wake of the Supreme Court's deeply misguided Hobby Lobby decision, we need to go further to empower the women of New York state with the information they need to make their own health care choices. That is what the Reproductive Rights Disclosure Act would accomplish.”

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