The US Departments of Health and Human Services, Labor and Treasury (the Departments) recently issued a proposed rule (the proposed rule) to eliminate a moral exemption to the Affordable Care Act (ACA) contraceptive mandate and establish an "individual contraceptive arrangement" to permit individuals to obtain contraceptive services at no cost in instances in which their employer does not offer coverage based on its religious beliefs (objecting entities). This is the latest development in the Biden administration's efforts to increase reproductive health access after Dobbs v. Jackson Women's Health Organization. The Departments previously issued a strong reminder to health plans and insurers that the ACA requires contraceptive coverage at no additional cost to individuals, noting that they had received reports of individuals experiencing trouble accessing contraceptive coverage.
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The ACA requires most individual and group health plans to cover preventive services, screenings and vaccines without cost sharing. Preventive services include contraceptive services consistent with guidelines supported by the Health Resources and Services Administration. While there is generally widespread agreement on the value of preventive services, implementing the ACA's contraceptive coverage requirement has been fraught with opposition from those with religious or moral objections to contraception. From 2010 to 2022, the Departments issued a Request for Information, two proposed rules, four interim final rules, five final rules, an advanced notice of proposed rulemaking and four sets of Frequently Asked Questions. Much of the back-and-forth over the limits of the contraceptive service mandate was driven by more than a half dozen cases in federal court.
Under a 2018 final rule issued by the Trump administration, objecting entities could avoid compliance with the contraceptive services mandate in a manner that the Departments found objectionable. In their view, the regulation unreasonably impaired important ACA policy goals.
The proposed rule would, if adopted in final form, establish an "individual contraceptive arrangement," which may have originated with the US Supreme Court in Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014). Burwell held that privately held for-profit corporations are exempt from a regulation their owners religiously object to, if there is a less restrictive means of furthering the law's interest, according to the provisions of the Religious Freedom Restoration Act of 1993. Claiming that the least-restrictive standard is exceptionally demanding, the Court said that the most straightforward way of ensuring access to contraceptives:
"[W]ould be for the Government to assume the cost of providing the [ ] contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers' religious objections." Id. at 728.
The individual contraceptive arrangement would not require any involvement on the part of an objecting entity. Rather, providers or facilities that furnish contraceptive services could be reimbursed by offsets to their liability user fee adjustment. Notably, the proposed rule would leave in place the existing religious exemption for entities and individuals with religious, though not moral, objections.
The individual contraceptive arrangement relies on providers of contraceptive services to offer these services at no cost to individuals. The provider is instead reimbursed from a participating qualified health plan under a state marketplace of exchange.
To date, objecting entities have not supported any mechanism that would give their employees access to contraceptive services. As their objections have focused on their need to be involved in the process of providing access, it remains to be seen whether they will strongly oppose the proposed rule. In the meantime, employers and plan sponsors should continue to provide contraceptive coverage with no cost-sharing under their health plans, and employers and plan sponsors who may be interested in this limited exception to the contraceptive coverage requirement may want to submit comments to the proposed rule. For more information, please contact your regular McDermott lawyer or one of the authors listed below.
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