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FAQ: Administration’s New Contraception Rules Explained

Aug 26, 2014

The Obama administration has released new rules they say will give employees of  religiously affiliated organizations a way to obtain contraceptive services as part of their health insurance coverage while respecting the religious beliefs of their employers.

The announcement follows a controversy that has dogged the administration as religiously affiliated employers objected to efforts to expand contraceptive options for women under the health law. The latest regulations seek to satisfy complaints about earlier guidance on contraception coverage that instructed these employers to notify their insurers or third-party administrators if they did not want to comply with the law’s contraception coverage based on religious objections.

The regulations unveiled Friday would allow religiously affiliated employers to notify the government – rather than their insurer – of their objections to the law’s coverage of birth control. The government will then notify the insurer to provide the contraception coverage. A second rule suggests the administration will allow the same mechanism for some businesses that object to contraception on religious grounds but seeks public comment on how to identify businesses to be included.

Officials announced in 2012 that under the preventive care provisions of the federal health overhaul, insurance plans should provide contraception without charge to women. While the administration exempted houses of worship, like churches, the guarantee of contraception coverage applied to such religious-affiliated organizations as hospitals and colleges. The administration vowed to make sure those groups did not have to pay for that coverage, but the policy sparked fierce opposition from leaders of Catholic and other religious groups, and it has led to more than 100 court challenges by religious-affiliated nonprofit groups and private employers opposed to contraception.

In June, the Supreme Court allowed a key exemption to the health law’s contraception requirements when it ruled that closely held, for-profit businesses could assert a religious objection to those rules.

Here are some common questions and answers from KHN that help explain the administration’s contraceptive policy and the opposition.

Q. What do the new regulations require?

A: Women employed by nonprofit religious organizations opposed to contraceptives, such as Catholic hospitals or colleges and student health plans, are entitled to get contraceptive services and products without a co-payment. But the organization is not required to bear the cost of the service.

In those workplaces, employers would notify the Department of Health and Human Services (HHS) of their religious objections to providing coverage for contraceptive services. HHS and the Department of Labor would then notify insurers and third-party administrators so individuals enrolled in those plans would receive separate coverage for contraceptive services with no additional cost to the enrollee or the employer, according to a fact sheet from HHS.

“Under the accommodation, an eligible organization does not have to contract, arrange, pay or refer for contraceptive coverage. At the same time, separate payments for contraceptive services are available for women in the health plan of the organization, at no cost to the women or to the organization,” the fact sheet states.

For the second proposed rule, HHS is seeking public comment on how to define a closely held for-profit company. A possible definition could include companies that are not publicly traded or the companies’ ownership could be limited to a certain number of owners, the fact sheet suggests.

Comments on both rules are being accepted for the next 60 days, but the rule instructing nonprofit employers to notify HHS of any religious objections to contraceptive coverage took immediate effect, HHS said.

Q: What does the health law say about contraception coverage?

A: As part of the law’s coverage of preventive services, health insurance plans are required to cover all Food and Drug Administration-approved contraception methods  for women without any cost-sharing, such as deductibles or co-payments.  Those methods include birth control pills, intrauterine devices and sterilization procedures.  Employers with 50 or more workers that offer coverage that doesn’t meet that standard would face fines of $100 a day per worker, significantly more than the penalties for not offering insurance.  These large employers that do not offer any coverage face an annual fine of $2,000 for most employees. The contraceptive guidelines apply to women only.

Q: Why did some employers object to the previously announced rules?

A: Last year the Obama administration released rules requiring religiously affiliated organizations to notify their insurer or third-party administrator of their objections. Insurers then would notify enrollees in the health plan that they are providing separate no-cost payments for contraceptive services.

But some religious groups and private employers objected on the basis that it violated their religious freedom. Even filing a form with their insurer, they said, would make them a participant in providing contraception, which they object to on religious grounds.

Q. How did the recent Supreme Court decision on contraception coverage influence the administration’s recent announcement?

A. In June, the Supreme Court ruled that that closely-held, for-profit businesses could assert a religious objection to the Obama administration’s regulation. The court’s majority said that the companies that filed suit -- Hobby Lobby Stores, a nationwide chain of 500 arts-and-crafts stores, and Conestoga Wood Specialties, a custom cabinet manufacturer -- did not have to offer women employees all FDA-approved contraceptives as part of a package of preventive services that must be covered without copays or deductibles under the law. The companies had argued that several types of contraceptives violate their owners’ religious beliefs. The ruling also included a Hobby Lobby subsidiary, the Mardel Christian book stores.

In July, the high court also ruled that while Wheaton College's suit objecting to the Obama administration's accommodation on birth control goes forward, the evangelical college, which is based in Illinois, could be exempted from complying with the health law’s contraception coverage. That order drew a furious response from the three women justices.

The administration said the rules released Friday were in response to those two court decisions.

Q: Wouldn't religious institutions still pay for birth control as part of the insurance they provide to their workers?

A: Administration officials have said previously that the policy should not increase costs for the insurer and may save money by eliminating some pregnancies. They pointed to the Federal Employees Health Benefit plan, which had no increase in premiums after contraception coverage was added.

To further alleviate cost concerns of insurers and third party administrators, the administration earlier said that they would get a reduction in the user fees they pay to participate in the health law’s online insurance marketplaces, or exchanges.

 Q. Will these new announcements stop opposition to the health law’s contraception coverage?

A. Probably not. In a statement after the administration’s announcement on Friday, the president of the United States Conference of Catholic Bishops said while his group would study the recommendations and release detailed comments at a later date, upon initial review “we note with disappointment that the regulations would not broaden the ‘religious employer’ exemption to encompass all employers with sincerely held religious objections to the mandate.”

Instead, said Archbishop Joseph E. Kurtz of Louisville, Ky., “the regulations would only modify the ‘accommodation’ under which the mandate still applies and still requireprovision of the objectionable coverage.”

Administration officials have maintained that women are entitled to the law’s contraception coverage no matter where they work.

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