The DOL, HHS and IRS have
published final regulations addressing the preventive services
mandate requirement in the Affordable Care Act ("ACA").
Most notably, the final regulations, which are effective for plan
years beginning on or after September 14, 2015, formalize a proposed
rule that accommodated the objections of religious organizations to
covering contraceptive services, which are considered preventive
services under the ACA. The final regulations also make other minor
changes to other aspects of the preventive services mandate as
provided in the interim final regulations issued in 2010.
Background. The ACA requires all non-grandfathered health
plans to cover certain preventive services without cost
sharing. These services include preventive care and screenings
for women as listed in guidelines promulgated by the Health
Resources and Services Administration ("HRSA"). HRSA's
guidelines require coverage of contraceptive services.
DOL, HHS and IRS, which are
responsible for implementing the ACA's preventive services mandate,
have previously issued guidance attempting to accommodate the
objections of religious organizations to covering contraceptive
services. The accommodation was originally intended only for
nonprofit organizations. However, in the wake of the Supreme Court's
decision in Burwell v. Hobby Lobby Stores, Inc., which held
that closely-held, for-profit organizations are also entitled to an
accommodation of their religious beliefs, the agencies published a proposed rule to accommodate the beliefs
of closely held for-profit organizations as well. (See the Alert
Final Regulations. The following are some of the highlights from the
accommodation for religious employers. The final regulations formalize the proposed
rule that accommodated the objections of closely-held, for-profit
organizations to the ACA's contraceptive mandate. The final
regulations explain that status as a closely-held, for-profit
organization is generally determined by using the same general
approach as under the Internal Revenue Code (i.e., at least
50% of the organization must be directly or indirectly owned by five
or fewer individuals). However, the final regulations provide more
flexibility than the proposed rule in that a company with a
"substantially similar" ownership structure may now also
qualify for the accommodation. The final regulations also provide
attribution rules and prohibit qualifying organizations from having
any publicly-traded ownership interests.
The eligible entity's
governing body must adopt resolutions or take other similar formal
action to establish its objection to providing contraceptive services
on account of its owners' religious views. In addition, eligible
entities must affirmatively indicate their objection to providing
contraceptive coverage by either filing EBSA Form 700 (with the DOL)
or notifying the DOL or HHS directly.
Out-of-network providers. The final regulations provide that a plan will
be required to cover out-of-network preventive services without cost
sharing if the plan does not have an in-network provider who can
provide the required preventive services.
Mid-year plan changes. The final regulations provide that, as a
general rule, a service that qualifies as a recommended preventive
service on the first day of the plan year must continue to be
provided throughout the plan year even if the recommendation changes.
An exception to this general rule is that a plan may drop coverage
mid-year for any service that is either downgraded to a "D"
rating (by the applicable governing body), is subject to a safety
recall, or is otherwise deemed by a federal agency to pose a
significant safety concern. In addition, other requirements may apply
in connection with ceasing to provide coverage for a preventive
service mid-year, such as notifying participants in advance of the
Action Steps for
Employers. Employers that meet
the requirements for eliminating coverage for a specific preventive
service must be sure to address any administrative issues (e.g.,
providing participants with advance notice of the change) before
eliminating any such coverage.
The final regulations are
available at: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28364