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Know What's Required for Employers Ceasing Contraceptive Coverage

On July 17, 2014, the U.S. Department of Labor released a Frequently Asked Question related to recent changes in the contraceptive coverage mandate under the Affordable Care Act (ACA).

These changes are related to the U.S. Supreme Court’s June 30, 2014, ruling in Burwell v. Hobby Lobby Stores, Inc., which provided an exemption from the ACA’s contraceptive coverage requirement for closely held for-profit corporations with religious objections to providing contraceptives.

The FAQ, which was jointly prepared by the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury, outlines notification rules for employers that plan to discontinue providing contraceptive coverage to employees as permitted by the Court’s ruling.

Contraceptive Coverage Mandate

The ACA requires non-grandfathered health plans to comply with certain preventive care guidelines for women, effective for plan years beginning on or after August 1, 2012. There are special rules for certain religious and non-profit employers.

The guidelines, which were issued by HHS, require covered non-grandfathered health plans to cover women’s preventive health services, including contraceptive methods, without charging a copayment, a deductible or coinsurance. Under the guidelines, plans must cover all FDA-approved contraceptive methods, sterilization procedures and patient education and counseling for all women with reproductive capacity.

Notice Requirements for Ceasing Coverage

The FAQ addresses situations where a closely held for-profit corporation's health plan will cease providing coverage for some or all contraceptive services mid-plan year. It states that this reduction in coverage will trigger certain notice requirements to plan participants and beneficiaries.

For plans subject to the Employee Retirement Income Security Act (ERISA), ERISA requires disclosure of information relevant to coverage of preventive services, including contraceptive coverage. Specifically, existing DOL regulations require a plan’s summary plan description (SPD) to include a description of the extent to which preventive services (which includes contraceptive services) are covered under the plan.

Accordingly, if an ERISA plan excludes all (or a subset of) contraceptive services from coverage under its group health plan, the plan's SPD must describe the extent of the limitation or exclusion of coverage.

For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply. ERISA and related regulations generally require disclosure no later than 60 days after the date of adoption of a modification or change to the plan that is a material reduction in covered services or benefits.

Other disclosure requirements may also apply. For example, state insurance laws applicable to health insurance issuers could require additional disclosures to participants and beneficiaries.

Additional guidance on implementation of the Court’s ruling is expected.

Click here to read our article on the initial developments on the contraceptive coverage ruling.

To speak with an Alltrust Compliance Expert, click here.