More on the ACA’s Contraceptive Coverage Mandate – Exempt vs. Eligible or Accommodated Employers
January 8, 2014
January 8, 2014
This story from last week about the U.S. Supreme Court’s temporary stay of the Affordable Care Act contraceptive coverage mandate reminded me about an opinion issued by a federal judge in the Northern District of Indiana on Dec. 20, 2013, which reminded me that I should post an update to a post I did several weeks ago. (Full disclosure: I clerked for the judge in the Indiana case, Chief Judge Philip P. Simon, and he’s definitely in the running for “World’s Best Boss.”) To summarize one of the main points of that post: I was curious as to why the Department of Health and Human Services was treating churches (and other houses of worship) differently than non-church religious organizations with respect to the ACA’s requirement that (most) employers provide health insurance policies with a contraceptive coverage benefit. That seemed problematic to me.
It turns out that the situation is more complicated than I envisioned, though the basic point stands. In fact, there are not just two types of employers for ACA religious exemption purposes – there are three. In addition to secular employers (that do not object to providing contraceptive coverage) and houses of worship (which are completely exempt from the coverage requirement), there are employers that are “eligible” or “accommodated.” These are religious-themed or religious-oriented entities that are not churches or synagogues or the like – for example, religious universities such as Notre Dame (the plaintiff in the Indiana case), Catholic student organizations, or hospitals owned by religious groups. According to the final federal regulations, these groups must (1) oppose providing coverage for some or all of the contraceptive services required to be covered under the ACA and the accompanying ERISA statutes; (2) be organized and operated as nonprofit entities; (3) hold themselves out as religious organizations; and (4) self-certify that they satisfy three additional criteria.
These accommodated or eligible employers don’t have to provide insurance including contraceptive coverage to their employees. They do, however, have to certify to DHHS that they will not provide that coverage. At that point, the insurer or third-party administrator (TPA) must exclude contraception from the employer’s group policy, but then it must pay for the employees’ contraceptive services on its own without charging an additional fee or premium. That may sound onerous, but the insurer or TPA is then permitted to deduct its federally facilitated exchange fees (i.e., the 3.5 percent fee paid by insurers to participate on the national insurance exchange). In this way, the intent of the contraceptive coverage mandate is satisfied, but the eligible or accommodated employer isn’t spending its own money to provide objectionable coverage to its employees.
So then what’s the eligible or accommodated employers’ complaint? That’s where it gets a little more abstract. Remember, the accommodation process is kick-started by the employer’s self-certification that it’s an eligible entity. Some employers argue that doing so effectively causes their employees to receive contraceptive coverage (albeit not paid for by the employers), which they believe to be immoral. That’s the basis for their lawsuits.
And how have they fared? That’s a mixed bag. In the Northern District of Indiana case, Notre Dame lost. Judge Simon essentially held that the act to which the school objected – providing contraceptive coverage to its employees – was being performed by another entity (the insurer or TPA), and thus Notre Dame was not suffering any burden. He didn’t buy the argument that the physical act of submitting the required self-certification facilitated contraceptive coverage, thus violating Notre Dame’s deeply held religious or moral convictions. This is at odds with Zubik v. Sebelius, a decision handed down Nov. 21, 2013, by the Western District of Pennsylvania, which reached a different result. Judge Arthur J. Schwab held that being forced to provide information that would be used for a purportedly “immoral purpose” is, in fact, a burden to a religious organization. He also relied on the seeming unfairness in treating houses of worship differently than what he called “good works (faith in action) employers.”
It’s beyond the scope of this blog to evaluate which opinion is more persuasive. On the one hand, employers do a lot of things that theoretically might “facilitate” their employees’ use of contraception. If Notre Dame pays its employees, for example, there’s always a chance that some of those individuals might take their hard-earned money and purchase birth control. That looks an awful lot like “facilitation,” and it’s hard to see where you’d draw the line separating what’s allowed and what’s not. On the other hand, the judge in the Western District of Pennsylvania has a good point that it’s a bit worrying that the government is distinguishing between houses of worship and other religious-affiliated entities – it’s almost like it’s classifying various organizations as “religious enough” (or not) to be exempted from the ACA contraception mandate altogether. (In fairness, I think the thought process behind that distinction is that there are a lot more nonmember employees of religious hospitals and universities than churches.)
As I noted in my prior post, my guess is that this will be resolved in the next several months when the Supreme Court hands down its decision in Sebelius v. Hobby Lobby Stores. I just wanted to elaborate a bit on the precise details of the regulatory regime that DHHS is using to determine who must provide contraceptive coverage and who is exempt from that mandate, and what the alternatives to coverage are.