On January 30, 2013, the U.S. Department of the Treasury, the Department of Labor, and the Department of Health and Human Services (the “Departments”) issued proposed regulations to amend to exempt group health plans established or maintained by certain “religious employers” with respect to the Affordable Care Act (“ACA”) requirement to cover contraceptive services. The ACA currently requires non-exempt, non-grandfathered group health plans to provide, without cost-sharing by employees, certain preventive health services including contraceptive services, sterilization, and abortion services. In response to concerns that this requirement violates religious beliefs of employers, the Departments have promulgated proposed amendments to the regulations.

The proposed regulations amend the criteria for the religious employer exemption. The current definition of “religious employer” requires that the employer:

  1. Has the inculcation of religious values as its purpose;
  2. Primarily employs persons who share its religious tenets;
  3. Primarily services persons who share its religious tenets; and
  4. Is a non-profit organization described in Section 6033(a)(1)(a)(3)(A)(i) or (iii) of the Internal Revenue Code.

The proposed regulations revise the definition of “religious employer” to eliminate the first three prongs listed above, but maintain prong number four. Section 6033 of the Internal Revenue Code refers to churches, their integrated auxiliaries, and conventions or associations of churches, as well as to the exclusively religious activities of any religious order. The Departments have represented that with the revised definition there will “no longer be any question as to whether group health plans of houses of worship that provide educational, charitable, or social services to their communities qualify for the exemption.”

The proposed regulations also establish accommodations for health coverage established and maintained by “eligible organizations.” To meet the definition of “eligible organization,” an organization must meet all of the following criteria:

  1. The organization opposes providing coverage for some or all of the contraceptive services required to be covered under Section 2713 of the Public Health Service Act on account of religious objections;
  2. The organization is organized and operates as a non-profit entity;
  3. The organization holds itself out as a religious organization; and
  4. The organization self-certifies that it satisfies the first three criteria.

The purpose of the accommodation is to provide women with contraceptive coverage without cost- sharing and without the eligible organization having to contract, arrange, or provide contraceptive coverage. Instead, the health insurance issuer providing group health coverage maintained by an eligible organization would assume sole responsibility to provide contraceptive coverage without cost-sharing, premium fee, or other charge to plan participants and beneficiaries. For this accommodation to apply, the eligible organization presents its health insurance issuer with a self-certification specifying the contraceptive services that the eligible organization will not establish, maintain, administer, or fund coverage. The health insurance issuer will automatically enroll plan participants in separate individual health insurance policies that cover the recommended contraceptive services and assume all costs associated with providing that separate contraceptive coverage.

The Departments are seeking comments to the proposed regulations on or before April 8, 2013. The proposed regulations are intended to become final before August 1, 2013.