ACA UPDATE: Contraceptive Coverage Rules

Compliance, Employee Benefits

On October 6, 2017, the U.S. Departments of Treasury, Labor (DOL) and Health and Human Services (HHS) (collectively the “Departments”) issued two interim final rules regarding the Affordable Care Act’s (ACA) requirement for health insurance plans to cover contraceptives. The first rule expands the exemption for employers that object to providing contraceptive coverage based on religious beliefs. The second rule provides an additional exemption for certain employers that object to providing contraceptive coverage based on moral convictions. Both rules are effective immediately, thereby expanding the number of employers that may claim an exemption.


The ACA requires that non-grandfathered health plans provide women’s preventive services at no cost. Shortly following the passage of the ACA in 2010, President Obama issued Executive Order 13535 (March 24, 2010) in which he stated that despite the requirements of the ACA, Federal laws to “protect conscience remain intact” and that federal agencies “have a role in ensuring that these restrictions are enforced, including HHS.” Guidelines regarding women’s preventive services were issued in August 2011 and included coverage for all FDA-approved contraceptive services. In 2012, the Departments issued guidance that exempted narrowly defined “religious employers” from the requirements. Other church affiliated employers that objected to the contraceptive requirement were not exempt but could take an “accommodations” approach.

The “accommodations” such employers could pursue did not require that the employer contract, arrange, pay or refer to any contraceptive coverage to which they objected. Rather, separate payments would be provided to female employees for such contraceptive services by an independent third party, such as an insurer or third-party administrator (TPA). This applied to “eligible organizations” that were:

  • Opposed to providing coverage for some or all of the contraceptive services on account of religious objections
  • Organized as a nonprofit entity
  • Held itself out as a religious organization.

A narrow exception to the coverage requirement was also created by the US Supreme Court in Burwell v. Hobby Lobby Stores, Inc. et al. for closely held for-profit businesses that objected to providing coverage for certain types of contraceptives based on sincerely held religious beliefs. Those employers desiring an accommodation had to “self-certify” or notify HHS that it met the criteria and provide the certification to the issuer or TPA.

New rules

Both new rules provide a greater amount of discretion for any employer that objects to the contraceptive coverage requirement. Under the new rules employers are no longer required to choose between complying directly with the law or complying through the accommodation approach. Employers may now elect to opt out of providing contraceptive coverage if they meet the one of the new broad exemptions.

The religious exemption now applies to the following:

  • Churches, integrated church auxiliaries, conventions or associations of churches, or religious orders
  • Non-profit organizations
  • For-profit organizations, regardless of whether they are closely held
  • Institutions of higher learning
  • Any other nongovernmental employers

The exemption based on moral objections is a bit narrower and only applies to the following employers:

  • Nonprofit organizations
  • Privately held for-profit entities
  • Institutions of higher education

Health insurance issuers may also qualify under this exemption. Moving forward any entity seeking to leverage the exemption should note that self-certification requirements are voluntary under this change.

Key Takeaway

Employers who have religious or moral objections to the ACA contraceptive coverage requirement should review this new guidance to determine whether the expanding definition of exempted entities includes their organization. If an employer believes they meet these requirements and they would like to eliminate contraceptive coverage, we encourage you to work with your legal counsel to make sure you meet all legal requirements

If you have additional questions on this ruling, contact your M3 Account Executive for assistance.

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