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Health Care Reform and the Contraceptive Requirement Ruling

Employee Benefits

Supreme Court Rules on Burwell v Hobby Lobby Case

On June 30, 2014, the United States Supreme Court ruled that the federal government could not require that the closely-held corporations involved in the case provide health insurance coverage for contraception in violation of the sincerely held religious beliefs of the companies’ owners. The court found that such a requirement was a violation of the Religious Freedom Restoration Act of 1993 (RFRA) which, according to the court, prohibits the federal government from taking “any action that substantially burdens the exercise of religion unless that action constitutes the least restrictive means of serving a compelling government interest.”

In analyzing the contraceptive requirement under the Affordable Care Act (ACA), the Supreme Court did find that the Health and Human Services (HHS) mandate to provide such contraceptive coverage furthers a compelling government interest; however, the mandate was not the least restrictive means of serving that interest. The court found there were other ways in which Congress or HHS could ensure that every woman has access to the free contraceptives at issue in the case. In fact, the court specifically referenced how employees of non-profit religious organizations were able to obtain no-cost contraceptives even though those non-profits are excluded from the mandate. The court relies on that situation as a model of a less restrictive means of providing contraceptives.

It should be noted that the Court goes to great lengths to state that the ruling in this case is narrow and that this does not give companies free reign to opt out of laws they disagree with because of sincerely held religious beliefs. So for now, the ruling applies to the companies who brought this suit (which includes Hobby Lobby).

As a reference, the Internal Revenue Service (IRS) generally defines a “closely-held” corporation” to mean a corporation that: (1) Has more than 50% of the value of its outstanding stock owned (directly or indirectly) by five or fewer individuals at any time during the last half of the tax year, and (2) Is not a personal service corporation.

Key Takeaway

Because the Supreme Court has defined this decision as narrow, we are unsure whether this would apply to other companies. Based on the reasoning in this opinion, a closely-held corporation may be exempt from providing certain no-cost contraceptives, if doing so would be in violation of the sincerely held religious beliefs of its owners. If you are interested in exploring your rights and obligations going forward as a business, we recommend you seek the advice of counsel.

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