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Business and Policy Areas
Business and Policy Areas

Rules Proposed on Contraception Coverage for Religious Organizations

February 8, 2013

The Obama administration proposed rules under the Affordable Care Act seeking a compromise on coverage of contraceptives in non-grandfathered group and student health plans offered by certain religious organizations, including colleges and universities. The proposed rule was issued jointly on February 1 by the Department of Health and Human Services (HHS), the Department of Labor's Employee Benefits Security Administration, and the Internal Revenue Service. The proposal, which covers employer-provided group health plans and student health plans, would provide for separate contraceptive coverage with no cost sharing, offered by third-party issuers. This avoids forcing religious institutions to provide a service that is contrary to their beliefs.

The proposal provides guidance on coverage for preventive care that includes contraceptive services with no co-pays for plan participants and beneficiaries (or, in the case of student health insurance coverage, student enrollees and their covered dependents). Religious organizations opposed to paying for contraception will be exempt from doing so.

For purposes of the rules, "contraceptive coverage" refers to all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity, as prescribed by a health care provider. Inclusion of such coverage under preventative health services for women was mandated in 2011 when HHS adopted recommendations made by the Institute for Medicine. At that time, interim final rules were issued addressing exemptions for religious institutions. The February 1 proposal recommends changes to those rules.

Religious Employers and Eligible Organizations

Earlier rules issued in 2012 defined a "religious employer" as one that:

  • has the inculcation of religious values as its purpose;
  • primarily employs persons who share its religious tenets;
  • primarily services persons who share its religious tenets; and
  • is a nonprofit organization described in Internal Revenue Code Section 6033(A)(i) or (iii) that defines churches, their integrated auxiliaries, and religious orders.

The new proposal would adopt a broader definition, relying only on whether the employer is a religious nonprofit under Code Section 6033(A)(i) or (iii).
An eligible organization including religious institutions of higher education would be defined, for the purposes of these rules only, as one that:

  • opposes providing coverage for some or all of the required contraceptive services due to religious objections;
  • is organized and operates as a nonprofit; and
  • holds itself out as a religious organization.

The organization must self-certify that it meets these three criteria.

Coverage Provided by Third Party

Under the proposed rule, for insured plans, including student health plans arranged by religious higher education institutions, the institution would inform their insurer of their exemption, and then the insurer would inform the institution's employees that the insurer would provide them with no-cost contraceptive coverage through a separate insurance policy not connected to the religious employer.

The insurer would be reimbursed through a reduction in the user fees it would normally pay to participate in the new state health exchanges, or marketplaces. The state exchanges are intended to provide a comprehensive information source where consumers can choose from eligible health insurance plans by comparing prices and benefits.

For self-insured plans, including student health plans, religious organizations would be required to notify third-party administrators. The third-party administrator would then work with an insurer to arrange no-cost contraceptive coverage through separate policies. The proposal suggests three manners in which this process could work and requests public comment on the best option.

Comments on the proposed rules are to be submitted to HHS by April 8, 2013.


Mary Bachinger
Director, Tax Policy