The Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) have issued the twentieth set of FAQs addressing implementation of the Affordable Care Act (ACA). These FAQs are intended to answer questions from stakeholders to help people understand the law and benefit from it. In related developments, the Equal Employment Opportunity Commission (EEOC) released updated enforcement guidance under the Pregnancy Discrimination Act of 1978 (PDA). Both pieces of guidance address the provision of contraceptives under a group health plan.
- The FAQ imposes a notification requirement on any closely held for-profit corporation that excludes all, or a subset of, contraceptive services.
- The EEOC takes the position that a failure to offer contraceptive services in a group health plan when other preventive care services are offered may violate Title VII of the Civil Rights Act.
THE DEPARTMENTS’ FAQ 20
This most recent FAQ comes in response to the recent Supreme Court decision in the Hobby Lobby case, where the Court held that the ACA’s contraceptive mandate violated rights of certain closely held for-profit corporations under the Religious Freedom Restoration Act of 1993 (RFRA).1
Briefly, the Departments make clear that if an ERISA health plan of a closely held for-profit corporation2 excludes all or a subset of contraceptive services from coverage under its group health plan, the plan’s SPD must describe the extent of the limitation or exclusion of coverage.
Further, for plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply. These rules generally require disclosure not later than 60 days after the date of adoption of a modification or change to the plan that is a material reduction in covered services or benefits. Other disclosure requirements may apply, for example, under state insurance law applicable to health insurance issuers.
While not addressed in this FAQ, under ERISA fiduciary rules, advance notice of this type of change is recommended.
WHAT ABOUT THE SBC?
While also not addressed in this FAQ, it is possible that a mid-year change to remove some or all contraceptives from the group health plan could require a change to the Summary of Benefits and Coverage (SBC) and issuance of a revised SBC. Such a change may be reflected as a “limitation & exception” under prescription drugs and/or as an “excluded service”.
Per the SBC instructions relating to limitations and exceptions:
List the significant limitations and exceptions for each row. Significance of limitations and exceptions is determined by the plan or issuer based on two factors: probability of use and financial impact on an individual. Examples include, but are not limited to, limits on the number of visits, limits on specific dollar amount paid by the plan, prior authorization requirements, unusual exceptions to cost sharing, lack of applicability of a deductible, or a separate deductible. See the Instruction Guide for the SBC, http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf.
Any mid-year change to the SBC requires 60 days advance notice and would satisfy the notice of a material reduction in group health plan benefits described above. Further clarification from the regulators with respect to issuing a revised SBC when some or all contraceptives are excluded by a closely held for-profit corporation mid-year would be helpful.
EEOC ADDS A NEW WRINKLE
The PDA makes clear that discrimination based on pregnancy, childbirth or related conditions is a form of sex discrimination prohibited under Title VII of the Civil Rights Act of 1964. This law generally applies to employers with 15 or more employees. The recent EEOC guidance states:
Employers can violate Title VII by providing health insurance that excludes coverage of prescription contraceptives, whether the contraceptives are prescribed for birth control or for medical purposes. Because prescription contraceptives are available only for women, a health insurance plan facially discriminates against women on the basis of gender if it excludes prescription contraception but otherwise provides comprehensive coverage. To comply with Title VII, an employer’s health insurance plan must cover prescription contraceptives on the same basis as prescription drugs, devices, and services that are used to prevent the occurrence of medical conditions other than pregnancy.3
The guidance states that in order to comply with Title VII, an employer providing prescription drugs, devices or services for the prevention of medical conditions other than pregnancy must cover prescription contraceptives on the same basis.
Practically, since all non-grandfathered group health plans subject to the ACA’s market reform provisions must cover preventive care services, such plans would appear to be in violation of the Title VII if they did not cover prescription contraceptives.4
While the EEOC acknowledges the Hobby Lobby decision in its guidance, the agency does not address whether certain employers may be exempt from Title VII’s requirements under RFRA or the First Amendment. It should be noted that EEOC enforcement guidance, while persuasive, does not have the full force of law. Thus, the EEOC’s position opens the door to additional challenges under Title VII and it will likely be up to the Courts to determine to what extent employers may limit contraceptive coverage.
WHAT SHOULD AFFECTED EMPLOYERS DO?
It is expected that the Departments will soon release regulations and guidance applicable in a post-Hobby Lobby environment. Until then, it is unclear how contraceptives may be accessed by participants and beneficiaries if they are removed from the plan of a closely held corporation due to religious beliefs.
In addition, the conflicting guidance from the EEOC adds yet another layer of complexity. Closely held for-profit employers considering removing some or all contraceptives due to religious belief should, absent guidance, consult with their counsel.
For the DOL FAQ 20, visit http://www.dol.gov/ebsa/faqs/faq-aca20.html
For the EEOC’s Enforcement Guidance: Pregnancy Discrimination and Related Issues, visit http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm#fn39
For the EEOC’s FAQs, visit http://www.eeoc.gov/laws/guidance/pregnancy_qa.cfm
For more information please contact AWANE at http://www.awane.com/contact-us/.
Phone: (800) 258-5318
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Peterborough, NH 03458
Disclaimer: This document is designed to highlight various employee benefit matters of general interest to our readers. It is not intended to interpret laws, regulations or to address specific client situations. It should not be construed as legal advice or opinion.
1 The Religious Freedom Restoration Act (RFRA) provides for religious exemption from a federal law, even if the law is of general applicability and neutral toward religion, if it substantially burdens a religious practice and the government is unable to show that its application would further a compelling government interest and is the least restrictive means of furthering the interest. 42 U.S.C. § 2000bb-1.
2 There is no prescribed definition for a closely held corporation. Based on the Supreme Court’s ruling in Hobby Lobby, it appears closely held corporations are organizations owned and controlled by members of a single family with religious beliefs that oppose some or all contraceptives where there is no dispute as to the sincerity of their religious beliefs.
3 For example, if an employer’s health insurance plan covers preventive care for medical conditions other than pregnancy, such as vaccinations, physical examinations, prescription drugs that prevent high blood pressure or to lower cholesterol levels, and/or preventive dental care, then prescription contraceptives also must be covered.
4 This may also be an issue for a grandfathered plan that excludes prescription contraceptive.