On Friday, October 6, 2017, the Department of Labor and the Department of Health and Human Services jointly issued new final regulations that deal with the ACA’s mandate that health insurance plans provide coverage for contraceptives with no cost-sharing for employees. These new regulations are effective upon issuance (that is, October 6, 2017).
The new rules allow any private, non-governmental employer that's not publicly traded to opt out of the contraceptive coverage mandate, in whole or in part, if they're “morally objected” to the mandate. Further, employers wishing to opt out of providing this coverage are no longer required to file a notice to the federal government alerting them about the decision they made (this includes employers and religious institutions that previously were required to file a notice). The new rule also waives the requirement for coverage for institutes of higher learning.
Importantly, publicly traded companies are still required to comply with this mandate until additional rules are released. While the ruling goes to great lengths to establish the legal reasoning prompting the change, ultimately, they hinge on the owners of a company having an objection, religious or otherwise, on the contraceptive requirement. It's impossible to state that the owners of publicly traded companies, which could easily be in the tens of thousands for large companies, would all hold the same position. The agencies are soliciting input on ways they may be able to extend the exemption to publicly traded companies.
Employers wishing to make plan modifications to exclude coverage for contraceptives need to take certain steps before being able to do so. First and foremost, mid-year plan changes require the distribution of a new Summary of Benefits and Coverage (SBC) no less than 60 days prior to the date the change goes into effect. Next, employers will need to modify all affected plan documentation via a plan amendment, and distribute a copy of that to all participants as a Summary of Material Modification (SMM). Plan Sponsors will also want to review their Cafeteria Plan documents to determine if this change is a “significant curtailment of coverage” which could create an opportunity for employees to make mid-year election changes.
Employers may also get requests from employees whose spouses have lost contraceptive coverage to enroll mid-year in the employee’s plan, should that plan continue to cover contraceptives, and will want to review their Cafeteria Plan to determine if such a mid-year enrollment would be allowed.
Employers wishing to make this change upon plan renewal will still need to update their plan documents and distribute the SMM as noted above, but the timing considerations are significantly easier as the mid-year election change restrictions won’t come into play.
This is the first in what could be a number of steps the administration could take to modify the Affordable Care Act in the wake of Congress’ failure to repeal and replace the ACA. While the law remains on the books, the agencies – especially Health and Human Services – has wide latitude within the law to rework many aspects of it via regulatory announcements such as this one. Assurance will continue to monitor developments and keep clients abreast of the latest developments.