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July 5, 2013

HRB 78 - Women’s Health Services Mandate Final Regulations – Exemption for Religious Organizations

Released July 5, 2013I Download as a PDF

July 5, 2013 -- The Affordable Care Act requires non-grandfathered plans to cover in-network preventive services at no cost to the participant.  In 2012, the preventive services specific to women was modified to include contraception and related services, applicable to all group health plans, excluding church plans.  The narrow definition of “church plan” created much concern for certain types of organizations who are opposed to the mandate.  In an effort to address these concerns, the governing agencies issued some transition relief for certain organizations with religious affiliations. Further, the government modified the definition of “church plan”.  On July 2, 2013, final regulations were issued as follows:

A church plan, defined as plan sponsored by a religious employer, is fully exempt from the mandate to cover contraceptive and related services.  A religious employer is any organization that is organized and operates as a nonprofit entity, as defined in IRC Sections 6033(a)(3)(A)(i) or (iii) and includes churches, temples, other houses of worship and their affiliated organizations

An organization with religious affiliation is known as an “eligible organization”. An eligible organization is defined as one that:

  1. Opposes providing coverage for some or all of the contraceptive services required by the women’s services mandate on account of religious objections;
  2. Is organized and operates as a nonprofit entity;
  3. Holds itself out as a religious organization; and
  4. Self-certifies that it satisfies the above three criteria (as discussed below) for each plan year to which the accommodation is applicable.

While a plan sponsored by an eligible organization is not fully exempt from the mandate, these regulations make an accommodation such that the eligible organization is not required to arrange or pay for the objectionable benefit. This accommodation is likewise available to student health plans.  But, its insurer or TPA of a self-funded plan must independently make the benefits available to plan participants.  An eligible organization must certify to its insurer or TPA and attest to the following criteria:

  1. The organization is organized and operates as a nonprofit entity;
  2. From February 10, 2012 onward, the health plan established or maintained by the organization has consistently not provided all or some of the required contraceptive coverage because of the religious beliefs of the organization; and
  3. Either the insurer or third-party administrator on behalf of a self-funded plan provides notification of the non-coverage to plan participants.

The self-certification must be executed by an authorized individual of the organization, and specify the types of contraceptive services that the organization does not wish to administer or fund.  This certification need only be done once; though, if the employer changes the insurer or TPA, the certification must be provided to the new provider.  The insurer or TPA must, in turn, notify plan participants about the availability of the contraceptive coverage.  Below is the model language that can be used in the notice:

“Your employer has certified that your group health plan qualifies for an accommodation with respect to the federal requirement to cover all Food and Drug Administration-approved contraceptive services for women, as prescribed by a health care provider, without cost sharing. This means that your employer will not contract, arrange, pay, or refer for contraceptive coverage. Instead, [name of third party administrator/health insurance issuer] will provide or arrange separate payments for contraceptive services that you use, without cost sharing and at no other cost, for so long as you are enrolled in your group health plan. Your employer will not administer or fund these payments. If you have any questions about this notice, contact [contact information for third party administrator/health insurance issuer].”

Effective Date 

With the exception of the rules relating to the religious employer definition, these regulations apply to plan years beginning on or after January 1, 2014.  The definition of religious employer applies to plan years beginning on or after August 1, 2013.  The transitional relief issued in February, 2013 (see CBIZ Health Reform Bulletin, Preventive Health Services for Women: Regulations Final – Limited Exception for Certain Church Plans, 2/13/12) is extended for plan years beginning between August 1, 2013 and December 31, 2013.

Additional information relating to the final regulations:

Background CBIZ Health Reform Bulletins:

Applicability to For-Profit Employers with Religious Objections

These regulations provide no relief to for-profit entities with a religious objection to provide contraceptive services.  To date, many court challenges have been brought.  It is anticipated that this issue could reach the Supreme Court at some point.  Two of the most recent court decisions are:

  • Hobby Lobby.  Recently, the 10th Circuit Court of Appeals returned a case brought by Hobby Lobby Stores, Inc, a for-profit employer, to the district court for consideration of granting an preliminary injunction on religious grounds to temporarily block the enforcement of the contraceptive coverage mandate (Hobby Lobby Stores, Inc. v. Sebelius, 2013 WL 3216103 (10th Cir. 2013); Hobby Lobby Stores, Inc. v. Sebelius, No. CIV-12-1000-HE (W.D. Okla. 2013).  The Court concluded that Hobby Lobby was entitled to bring claims under the Religious Freedom Restoration Act (RFRA), which provides that the government cannot substantially burden a person's exercise of religion. This decision has relieved Hobby Lobby of a significant $100 per day per person penalty imposed under IRC Section 4980D, which could have resulted in a total of $1.3 million per day/$475M per year penalty.
  • Beckwith.  The U. S. District Court, Middle District of Florida in Tampa has issued a preliminary injunction in the matter of Beckwith Electric Company (Beckwith Electric Co., Inc. v. Sebelius, Case No. 8:13-cv-0648-T-17MAP), enjoining the government from imposing the contraception mandate on a for-profit entity.  The Court determined that the plaintiff met the requirements to be granted preliminary injunction, based on the premise that the mandate violates first amendment rights under the RFRA.



About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.



The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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