Health and Human Services proposes new rules in response to Hobby Lobby and Wheaton College

The new rule allows those employers to inform HHS directly of its nonelection of certain contraceptive coverage

In response to the rulings by the Supreme Court in Hobby Lobby and Wheaton College, the United States Department of Health and Human Services (HHS), issued new rules on Aug. 22, 2014. The newly appointed HHS Secretary, Sylvia Burwell, said, “The rules, which are in response to recent court decisions, balance our commitment to helping ensure women have continued access to coverage for preventive services important to their health, with the Administration’s goal of respecting religious beliefs.”

Ostensibly, the new policies are intended to cure the issues in Hobby Lobby and Wheaton College. With the new rules, employees of for profit corporations like Hobby Lobby will be able to access an “accommodation” where the insurance company directly provides at no additional cost to the employee coverage with no financial involvement by the employer. This coverage is particularly relevant with respect to certain employers who choose not to provide coverage to their employees for certain preventative, contraception. For nonprofits, like Wheaton College, that object to even that accommodation (which was permitted for closely-held corporations like Hobby Lobby), HHS has essentially created an accommodation to the Hobby Lobby accommodation.

Plainly put, for non-profits that object to informing insurance companies that they elect not to provide certain contraceptive coverage to its employees (under the auspices that the mere notification of the non-election to insurance companies “may assist” employees in getting certain contraceptive benefits), the new rule allows those employers to inform HHS directly of its nonelection of certain contraceptive coverage, instead of making the notification to insurance companies. The Supreme Court first suggested the HHS notification option, and so far, the litigants have not objected to this seemingly substantively meaningless alternative. However, there was some debate among legal scholars about whether the notification to HHS would result in actual coverage for certain contraceptives. The new rule unequivocally clarifies that notification to HHS (instead of to the insurance company) indeed triggers automatic coverage for the very contraceptives that certain companies choose not to facilitate or otherwise provide coverage.

The new rules propose that HHS ease the mandate for Wheaton College (and, by implication, for some other non-profit groups). Secretary Burwell stated that “women across the country deserve access to recommended preventive services that are important to their health, no matter where they work. Today’s announcement reinforces our commitment to providing women with access to coverage for contraception, while respecting religious considerations raised by nonprofit organizations and closely held for-profit companies.”

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The rules can be found at the Office of the Federal Register. The following is a summary of the proposed rules for for-profit businesses whose owners object to providing contraceptives in their health care plans:

  • An exemption from the mandate would only exist for for-profit business organized as a “closely-held corporation.”
  • A corporation would not be eligible based upon religious objections if its stock is publicly traded.
  • HHS did, however, request public comments to help identify such a covered corporations. Tentatively, HHS proposes that a qualifying entity specify a maximum number of owners and/or specify a minimum percentage of a total number of owners who had actual ownership concentrated among them. These changes will not take effect immediately. The public has 60 days to submit comments on the proposal.

In contrast, the following rule change will take effect immediately upon publication in the federal register concerning non-profit groups (i.e., Wheaton College) of a religious nature that object to providing birth control coverage in their plans:

HHS will begin allowing these groups to notify the government — rather than their insurers — that they object to birth control on religious grounds. The government, not the employer, will instruct a nonprofit's insurer or third-party administrators to take on the responsibility of paying for the birth control, at no additional cost to the employer.

An HHS official stated, “The interim final regulations are consistent with the Court's order in Wheaton College, which require the objecting religious employers to object in writing to HHS letters
lodging their refusal to provide certain coverage for religious reasons. We will also provide a model notice that eligible organizations may, but are not required to use.”

HHS’ apparent strategy to cure the Supreme Court ruling was suggested by Justice Samuel Alito in his opinion in Wheaton College. Justice Alito wrote, “The Government could . . . extend the accommodation that HHS has already established for religious nonprofit organizations to non-profit employers with religious objections to the contraceptive mandate. That accommodation does not impinge on the plaintiffs' religious beliefs that providing insurance coverage for the contraceptives at issue . . . violates their religion and . . . serves HHS’ stated interests."

The latest proposals and rule changes will more than likely draw opposition from the same group of opponents that objected to the contraceptive mandate because employees may still receive contraception at no extra charge through their health plans. This mandate is just one of a number of preventive services required under the Affordable Care Act. The issue of whether a woman should have the right to choose whether she uses birth control, and whether such a choice must be funded through employer-health care plans, is certain to be among the many issues litigated in the aftermath of the Affordable Care Act.

Contributing Author

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Kimberly James

Kimberly James is Of Counsel in the Houston office of McGlinchey Stafford . Kim handles labor and employment law, as well as other general business...

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