New Supreme Court Rulings That Could Impact Your Employee Benefit Plan

New Supreme Court Rulings That Could Impact Your Employee Benefit Plan

Two recent rulings by the Supreme Court of the United States have implications for group employee benefit arrangements. A decision issued June 15, 2020, on workplace anti-discrimination protections and a July 8, 2020, ruling concerning the Affordable Care Act’s (ACA) prescription contraceptive coverage mandate could affect health plan coverage terms.  To help our clients understand how they could directly impact your plans, we’ve summarized the Court’s actions in both cases below.

Bostock v. Clayton County

A 6-3 decision in Bostock v. Clayton County ensures that the workplace anti-discrimination protections outlined in Title VII of the Civil Rights Act now include sexual orientation and gender identity. Even though the Bostock v. Clayton County case concerned hiring and termination practices regarding LGBTQ individuals, many experts interpreted the ruling as having implications for employee benefits.  Fringe benefit program discrimination also falls under Title VII, and employee benefits are a part of employment, so group benefit plans may be affected.

Based on this decision, employers should review their plan eligibility criteria and benefit designs and ERISA plan documents for possible discriminatory provisions. These might include:

  • Eligibility criteria that rely on state law regarding same-sex marriage and domestic partnership relationships, rather than blanket eligibility for same-sex marriage and same-sex and opposite-sex domestic partners
  • Potentially discriminatory benefit language, such as limits/differences based on sex regarding infertility or family planning
  • Potentially discriminatory exclusions, such as the exclusion of gender dysphoria and related conditions

The Bostock v. Clayton County decision came three days after the Trump Administration rolled back healthcare-related protections for LGBTQ people by releasing a revised final regulation implementing the Affordable Care Act’s (ACA) Section 1557 nondiscrimination requirements. The new rule substantially changes the previous Obama Administration regulation, most notably by narrowing the definition of discrimination based on sex to mean male or female alone. The Supreme Court’s decision does not directly impact the Section 1557 rules. However, the Supreme Court’s actions could be interpreted broadly by judges to apply to all forms of discrimination related to gender identity and sexual orientation.  At a minimum, the decision virtually guarantees new federal court challenges to the Section 1557 rule and will severely handicap future legal defense of the regulation.

Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, et. al.

The Supreme Court also issued a 7-2 ruling upholding two Trump Administration final rules about the federal requirement that employer group health plans provide first-dollar coverage of prescription contraceptives as preventive care. The decision allows group health plans to claim a plan exemption to exclude contraceptives from their coverage terms. Employers that assert an exemption may begin excluding coverage for all or some contraceptives starting on the first day of the next plan year following July 8, 2020.

Employer groups do not need to go through a formal opt-in process to access the exemption, but if they offer fully-insured coverage, they will need to notify and work with their carrier to implement the plan change. An objecting group’s summary of benefits and coverage (SBC), and their summary plan description and other ERISA plan documents will also need to reflect their choice.

If an objecting group chooses to, they may include an accommodation process as part of their plan design. Including it permits people who are covered by the plan but do not share the group’s point-of-view to access contraceptive coverage.  Payments for this aspect of their coverage will be arranged by the health insurance issuer or a third-party administrator (TPA) without involving payment from the group plan sponsor. If a group elects this option, they will need to make arrangements with their health insurer and TPA, if applicable. The employer will also need to disclose the accommodation process to plan participants through the SBC and ERISA plan documents.

In addition to the group health plan exemption, the rules make it possible for an employer group or individual health insurer to offer separate coverage to individual enrollees who object to some or all contraceptives based on personal sincerely held religious or moral beliefs. This provision only applies if an employer or carrier wishes and can offer separate coverage options. There is nothing that compels an employer or insurance carrier to accommodate individual-specific exemptions.

Any clients that may be interested in seeking an exemption for their next plan year should feel free to reach out to their Kistler Tiffany Benefits/OneDigital Client Executive or Account Manager to discuss the next steps.

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