Trump Administration Releases Interim Final Rules on Contraceptive Coverage and Group Health Insurance Plans

Trump Administration Releases Interim Final Rules on Contraceptive Coverage and Group Health Insurance Plans

On Friday, October 6, 2017, the Trump Administration released two interim final rules that will allow any employer to opt-out of the federal mandate for all non-grandfathered health plans to provide coverage for contraceptives without applying cost-sharing requirements.  One rule establishes how an employer plan can obtain an exemption for religious beliefs, and the other gives employers the opportunity to opt-out based on sincerely held moral convictions.  The rules apply to all employers and colleges and universities that provide group coverage to students. Both of these regulations take effect immediately.

Kistler Tiffany Benefits believes that all employer plan administrators need to understand these regulations, whether or not they plan to access them. Companies and institutions that wish to take advantage of the rules will need to follow specific procedures to carry out their choices legally.

If a business decides not to utilize any of the new options relative to contraceptive coverage, knowledge about the rules is also essential.  Employees may have questions about the new regulations.  Also, the rules allow willing plan sponsors to make accommodations for individual employees who might object to contraceptive coverage for religious or moral reasons by offering separate benefit packages that exclude contraceptive coverage for that person’s family unit.

The new regulations provide employers that object to providing coverage of all, or a subset of contraceptives, or sterilization and related patient education and counseling with two options.  The first option allows the use of a self-certification process to establish a complete exemption from the requirement to offer contraceptive coverage.  Alternatively, the new rules expand the optional accommodation process that was previously only available to certain businesses under the old contraceptive coverage regulations.  Now the optional accommodation system is open to all companies.   Employers that wish to provide their employees with the option to access contraceptive coverage but do not want to finance that coverage themselves can seek an accommodation by using EBSA Form 700 or sending other specified notice to the federal department of Health and Human Services (HHS).  This process allows an employer to voluntarily shift their obligation so that group beneficiaries have separate but seamless contraceptive coverage.  However, that coverage will be provided and financed by their issuer or third party administrator.

It is important to note that both of these options involve an employer deciding to stop offering and/or financing coverage of contraceptives completely.  Nothing in the new rules would allow a business to change its plan design to offer contraceptive coverage combined with some cost sharing.  Also, employers still need to follow state laws relative to contraceptive coverage.  Eight states mandate coverage of contraceptives without cost sharing and 28 require coverage of prescription contraceptives generally, including Delaware and New Jersey.

While the new rules take effect immediately, in practical terms, an employer cannot change health plan benefits right away.  The regulation still requires employer plans to follow existing federal requirements under the Public Health Services Act to provide 60 days of notice to participants if policy benefits are changed or reduced during the current plan year.  Additionally, the Employee Retirement Income Security Act of 1974 (ERISA) requires an employer to include the scope of benefits in its plan documents. So if a company accesses either exemption option, then all ERISA plan documents and summaries of benefits and coverage (SBCs) must be updated accordingly, and employees must be given current plan documents according to existing law.

The new rule does not require employers to provide employees with any special notice about their exemption status other than including information about the scope of covered benefits in ERISA plan documents and notices like SBCs that are already legally required to be given to beneficiaries.  However, if an employer does elect either contraceptive coverage exemption option, it is critical that all of their ERISA disclosures and plan documents are updated in the correct way.  If an employer chooses to use the optional accommodation process, then their issuer or the group plan’s third-party administrator will also notify plan beneficiaries.

Finally, these two new interim regulations are controversial.  Several groups and the Commonwealth of Massachusetts have already started the process to challenge them in federal court.  Kistler Tiffany Benefits will monitor the status of the regulations and keep our clients apprised as any new information or guidance as it is made available.

By Jessica Waltman, Special Contributor

Jessica Waltman is a health reform strategist, with more than 20 years of experience in health insurance markets and health policy. She is the former Senior Vice President, Government Affairs, for the National Association of Health Underwriters.