March 2018 | Issue Brief State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers Laurie Sobel, Alina Salganicoff, and Ivette Gomez Contraceptive Coverage under the Affordable Care Act (ACA) has made access to the full range of contraceptive methods affordable to millions of women. Since it was first issued in 2012, this provision has been controversial and has been the focus of two major cases that have reached the Supreme Court. Following the Hobby Lobby ruling, the Obama Administration took the stand that almost all women had an entitlement to the contraceptive benefit and developed an “accommodation” to assure they would still get coverage, even if their employer had religious objections to contraception. The Trump Administration, in contrast, has prioritized the rights of employers, and in October 2017, issued regulations that significantly broadened the exemption to nearly any employer with a religious or moral objection. The new regulations have been challenged by 8 states and have been blocked from being implemented pending the outcome of the litigation. Before the ACA was passed, many states had enacted contraceptive equity laws that required plans to treat contraceptives in the same way they covered other services. In addition, since the ACA was passed, a number of states have enacted laws that basically codify in state legislation the ACA benefit rules (requiring all plans to cover, without cost-sharing each of the 18 FDA approved contraceptive methods). This issue brief provides an update on the status of the continuing litigation on the federal contraceptive requirement and explains the interplay between the federal and state contraceptive coverage laws and the implications for employers and women. Background on State and Federal Contraceptive Coverage Requirements Before the ACA, coverage for prescription contraceptives was generally widespread in the private and public sectors, but not universal, and certainly not free of cost-sharing. In 2000, a ruling by the Employment Equal Opportunity Commission found that employers that covered preventive prescription 1 drugs and services but did not cover prescription contraceptives were in violation of the Civil Rights Act. 2 Currently, 30 states and DC require insurance plans to cover contraceptives, with a wide range of coverage and cost-sharing requirements, and exemptions among these mandates (Appendix A). State laws, however, do not have authority over all plans; they only apply to state regulated (fully-insured) 3 plans, but not self-funded plans under ERISA where 60% of covered workers are insured. Headquarters / 185 Berry Street Suite 2000 San Francisco CA / 94107 / 650 854 9400 Washington Offices and Conference Center / 1330 G Street NW Washington DC 20005 / 202 347 5270 kff.org / Email Alerts: kff.org/email / facebook.com/KaiserFamilyFoundation / twitter.com/KaiserFamFound Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California. The ACA is the first law to set preventive coverage requirements for health insurance across all markets – individual, small group, large group and self-insured plans. Starting in 2012, all new private plans were required to cover, without cost-sharing, the full range of contraceptive services and supplies approved by the Food and Drug Administration (FDA) as prescribed for women. Only employers that were classified as a “house of worship” were exempted from this requirement. While a number of states had contraceptive equity laws that required plans to cover some or all methods, cost-sharing typically applied. Fully-insured plans must comply with both state and federal laws. For some health services, the federal law may require a higher level of benefits, and for other services the state law may require a higher level of benefits. How Would the New Federal Regulations Change the Contraceptive Coverage Exemptions for Employers? Since they were announced in 2011, the ACA contraceptive coverage rules have evolved through litigation and new regulations (Table 1). Most employers are required to include the coverage in their plans. Limited categories of employers are eligible for an exemption under the Obama Administration regulations (Table 2). Houses of worship can choose to be exempt from the requirement if they have religious objections. Workers and dependents of exempt employers do not have coverage for either some or all FDA approved contraceptive methods. Religiously-affiliated nonprofits and closely held for-profit 4 corporations can opt out of providing contraceptive coverage by electing an accommodation, but are not eligible for an exemption. In these cases, women workers and dependents covered by an employer electing an accommodation get contraceptive coverage, but it is the insurer, not the employer, who pays for the contraceptive coverage. Table 1: Who Regulates Health Insurance Plans Who is the regulator and which Type of Plan Who assumes the risk? laws apply? Insurer collects premiums and State insurance regulators – state Fully-Insured Plan assumes the risk of providing AND federal regulations apply covered services Employer assumes the risk of Department of Labor under the providing covered services and Employer Retirement Income Self-Insured ERISA plan usually contracts with a third party Security Act (ERISA)- only federal administrator (TPA) to manage the regulations apply claims payment process. Some nonprofits, including the Little Sisters of the Poor, have continued to challenge the accommodation as requiring them to be complicit in the provision of contraceptives which they believe to be sinful. These cases made their way through the federal courts and were heard by the Supreme Court. In May 2016, the Supreme Court remanded Zubik v. Burwell, sending 7 cases brought by religious nonprofits objecting to the contraceptive coverage accommodation back to the respective Federal Courts of Appeal. These lawsuits were not resolved at the time of the November 2016 presidential election. The Trump Administration has not continued to defend these lawsuits, and has settled with most of the litigants. State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 2 The Trump Administration’s Interim Final Regulations were Timeline of Recent Contraceptive issued on October 6, 2017 and took effect the date they were Coverage Regulations & Litigation issued without an opportunity for public notice and comment, as Oct. 6, 2017: Trump Administration normally required under the Administrative Procedure Act. issues new regulations expanding Under the October 2017 regulations, there would no longer be a exemption without the usual notice guaranteed right of contraceptive coverage for female and comment period. employees and dependents or students. These regulations Nov.– Dec. 2017: 4 lawsuits were greatly expand the number of employers that are eligible for an filed by states challenging the st th exemption to all nonprofit and closely held for-profit employers regulations as violating the 1 and 5 Amendments of the Constitution and with objections to contraceptive coverage based on religious contending the Trump Administration beliefs or moral convictions, including private institutions of did not follow the Administrative higher education that issue student health plans. In addition, Procedure Act. publicly traded for-profit companies with objections based on Dec. 2017: Federal District Courts in religious beliefs would also qualify for an exemption. Table 2 PA and CA courts issue preliminary presents the changes to the contraceptive rule from the Obama injunctions blocking implementation of new regulations pending outcome Administration to those included in the new Interim Final of the litigation. regulations issued by the Trump Administration. Any employer eligible for an exemption could instead opt for an Jan.– Feb. 2018: Trump accommodation by notifying their insurer, third party Administration appealed PA case to rd 3 Circuit Court of Appeal; Trump administrator, or the government. If an employer opts for an Administration and the nonprofits accommodation, then their workers and dependents would still granted party status (Little Sisters of have contraceptive coverage without cost-sharing. It is not clear the Poor & March for Life) appealed th CA case to 9 Circuit Court of how many employers would choose an accommodation rather Appeal. than an exemption. March 2018: Federal court in MA dismissed the case, ruling that MA Four nonprofit advocacy groups and 8 states (CA, DE, VA, MD, lacks standing. NY, PA, MA, & WA) have filed lawsuits challenging the new regulations. The federal court in Massachusetts ruled that the state of Massachusetts lacks “standing” because the state cannot show that it will likely suffer future injury from the regulations and dismissed the case. In the cases lead by California and Pennsylvania, the federal courts have issued preliminary injunctions blocking the enforcement of these regulations pending the outcome of the litigation. These rd th decisions have been appealed to the 3 Circuit (PA) and 9 Circuit Courts of Appeal (CA, DE, VA, MD, 5 NY). The Supreme Court will likely ultimately hear these cases, which would mark the third round of litigation involving the contraceptive coverage provision reaching the high court. Table 2: Summary of Changes in the Contraceptive Coverage Regulations for Objecting Entities Trump Administration Obama Administration Issued October 6, 2017- Blocked by Currently Effective Courts December 2017 State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 3 Table 2: Summary of Changes in the Contraceptive Coverage Regulations for Objecting Entities Trump Administration Obama Administration Issued October 6, 2017- Blocked by Currently Effective Courts December 2017 What types of • At least one of each of the 18 FDA contraceptives approved contraceptive methods for must plans cover women, as prescribed, along with • No change. without cost- counseling and related services must be sharing? covered without cost-sharing. • Religious institutions defined as “houses • Religious institutions defined as “houses of worship.” of worship.” • Grandfathered plans. • Grandfathered plans. • Nonprofit or for-profit employers • No notice to employees is required. (including publicly traded companies), Women workers and female dependents insurers, or private colleges or must pay for their own contraceptives. universities that issue student insurance plans with a religious objection to Are any employers contraceptive coverage. “exempt” from the • Nonprofit or closely held for-profit contraceptive employers, insurers, or private colleges mandate? or universities that issue student insurance plans with a moral objection to contraceptive coverage. • Notice is only required if the plan previously included contraceptive coverage. Women workers and female dependents must pay for their own contraceptives. • The cost of contraceptives is borne by Who pays for women workers and female dependents. contraceptive • There is no guarantee of contraceptive coverage for coverage for employees of an exempt employees of organization. • No change. organizations • The employer may choose to cover receiving an some methods, but has no obligation to exemption? cover all 18 FDA methods without cost- sharing. • Closely held for-profit corporations and • Any entity (except for houses of religiously affiliated nonprofits with worship) eligible for an exemption can religious objections to contraception can What type of choose the accommodation instead of opt out of providing and paying for employers may the exemption. contraceptive coverage. seek an “accommodation” • Notice must be provided to either their • Notice must be provided to either their to avoid paying for insurer, third party administrator, or the insurer, third party administrator, or the contraceptives in federal government of their objection. federal government of their objection. their plans? • Women workers and female dependents • Women workers and female dependents receive no cost contraceptive coverage. receive no cost contraceptive coverage. State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 4 Table 2: Summary of Changes in the Contraceptive Coverage Regulations for Objecting Entities Trump Administration Obama Administration Issued October 6, 2017- Blocked by Currently Effective Courts December 2017 • Insurance companies of firms obtaining Who pays for an accommodation must pay for contraceptive contraceptive coverage. coverage for • Third-party administrators (TPA) of self- employees of funded health plans must cover the • No change. organizations costs of contraceptives for employees. receiving an The costs of the benefit are offset by accommodation? reductions in the fees the TPA pays to participate in the federal exchange. • When an employer or private college or university currently using the accommodation opts for an exemption, the revocation of contraceptive coverage When can entities will be effective on the first day of the change from an first plan year that begins 30 days after • N/A accommodation to the date of the revocation or 60-day an exemption? notice may be given in a summary of benefits statement. • The issuer or third party administrator is responsible for providing the notice to the beneficiaries. How Does the ACA Contraceptive Coverage Requirement Interact with State Laws Regulating Fully-Insured Plans? As discussed earlier, federal law applies to all plans while state law applies to only individual plans and fully-insured group plans. Currently, 30 states and DC require insurance plans to cover contraceptives, 6 with a wide range of coverage and cost-sharing requirements, and exemptions among these mandates. 7 Eleven of these states and DC have requirements that build on the federal requirement for no cost- 8 9 sharing for all FDA approved contraceptive methods for women (CA, DE, IL, MA , MD, ME , NV, NY, 10 11 OR , VT, WA ). Some of these states have gone beyond the ACA requirements mandating coverage of covering vasectomies or over-the-counter contraceptives. Most allow for fewer exemptions than currently permitted under federal law. In these states, employers with fully-insured plans must comply with the higher state standard. While federal law is more expansive in benefit scope than most state laws, the Trump Administration regulations allow more types of employers to be exempt than is permitted by most state laws. Therefore, employers eligible for a federal exemption under the proposed regulations would still have to comply with their state law and provide the level of contraceptive coverage that is required in their state. In some states, these benefit requirements are more limited than those required by the ACA. Nineteen states with contraceptive coverage laws allow cost-sharing and may not require coverage of all FDA approved methods. In these states, some employers with religious or moral objections who offer their workers a fully-insured plan would need to comply with this narrower state benefit requirement, even though the employer would be eligible for an exemption under federal law. As a result, a woman’s coverage will depend on her employer, the type of plan her employer has, and the state in which she resides. State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 5 To illustrate the complicated intersection of state and federal law, it is helpful to compare Exemptions Allowed Under State Contraceptive Coverage Laws how the contraceptive coverage exemption to the ACA requirement would play out for • Eight States (CO, GA, IA MT, NH, VT, WA and WI) do not allow any exemptions. objecting employers with fully-insured plans • Only three states (IL, MO and WV) allow for an in two states: California, a state with an employer with a moral objection to be exempt. expansive contraceptive coverage law, and • All the other states with a contraceptive coverage Iowa, a state with a minimal contraceptive requirement have allowed exemptions for narrowly equity law and no exemption (Table 3). If the defined religious employers, typically houses of worship or employers affiliated with a religious group Trump Administration’s proposed regulations that primarily employ people of the same faith. are implemented, all women enrolled in a fully-insured plan in California will continue to be entitled to coverage of all FDA approved methods without cost-sharing, unless their employer is a house of worship. Only the exemptions offered by the state would be available to objecting employers (with fully-insured plans). Because state law does not apply to self-insured plans, the federal rule would allow employers with those plans to qualify for the broader exemption. In contrast, Iowa’s law only requires plans to include contraceptive drugs and devices if the plan provides benefits for other outpatient drugs and devices. Unlike the federal and California requirements, plans in Iowa may charge cost-sharing for contraceptives. However, the state law has no religious or moral exemptions. Therefore, a woman enrolled in a fully-insured employer plan that includes outpatient drugs and devices would be guaranteed contraceptive coverage regardless of her employer’s objections to contraception, but could be charged cost-sharing. Table 3: Comparison of Federal Law to Two States: Scope of Benefits and Exemptions Applies to Scope of Benefits Exemptions Accommodation Must cover all FDA approved Closely held for- contraceptives with no cost- profit employers ACA – Current All plans sharing; must cover at least House of worship and religiously regulations one contraceptive within affiliated nonprofit each method category employers Any employer with a ACA – Must cover all FDA approved religious objection and Proposed contraceptives with no cost- Optional for any any employer except Trump All plans sharing; must cover at least employer eligible publicly traded Administration one contraceptive within for an exemption companies with a regulations each method category moral objection Individual market Must cover all FDA approved plans, fully-insured contraceptives with no cost- California group plans, sharing; must cover each House of worship None Medicaid managed therapeutically unique care plans contraceptive Equity law – no prohibition Fully-insured group Iowa on cost-sharing, tiering and None None plans formulary permitted State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 6 Conclusion The outcome of the litigation challenging the Trump Administration’s new regulations is not clear. Currently, the federal government is blocked from enforcing the new regulations. The new regulations would substantially expand the exemption to nonprofit and for-profit employers, as well as to private colleges or universities with religious or moral objections to contraceptive coverage. If the new regulations become effective, for women enrolled in fully-insured employer plans, the scope of their contraceptive benefits would depend on the coverage policies and exemptions established by state laws. Employers who qualify for the exemption under federal law would still need to comply with the state contraceptive requirement. Depending on the state law, employers may still have to provide no-cost coverage for some or all methods of contraception or a narrower set of contraceptive benefits. For women covered by fully- insured plans issued for employers with religious or moral exemptions, their choice of contraceptive methods would be determined by the scope of benefits and exemptions allowed by state law where they live. State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 7 Appendix Table 1: Exemptions Permitted Under State Laws for Employers with Objections to Contraceptive Coverage Religious Applies to No Religiously Moral Individual or House of State Exemption affiliated Other Group Market Worship (8 states) non-profit Plans 12 Arizona Group X X Arkansas Both X X California Both X (no cost-sharing) Colorado Both X 13 Connecticut Both X X District of Columbia (no cost-sharing; Both X ^ ^ effective April 17, 2018) Delaware Group X X (no cost-sharing) Georgia Both X Hawaii Group X X Illinois † † Both X X X X (no cost-sharing) Iowa Both X Maine (no cost-sharing; Both X X effective January 2019) Maryland Both X X (no cost-sharing) Massachusetts # (no cost-sharing; Both X X effective May 2018) Michigan Group X X ¥ ¥ Missouri Both X X X X Montana Group X Nevada € Both X X (no cost-sharing) 14 New Hampshire Group X 15 New Jersey Both X X 16 New Mexico Both X X New York ‡ Group X X (no cost-sharing) North Carolina Both X X Oregon (no cost-sharing; Both X effective January 2019) 17 Rhode Island Both X X Texas Both X X Vermont Both X (no cost-sharing) State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 8 Appendix Table 1: Exemptions Permitted Under State Laws for Employers with Objections to Contraceptive Coverage Religious Applies to No Religiously Moral Individual or House of State Exemption affiliated Other Group Market Worship (8 states) non-profit Plans Washington (no cost-sharing; Both X effective January 2019) West Virginia Both X* X X X Wisconsin Group X NOTES: AZ defines religious employers non-profit organizations described in section 6033(a)(3)(A)(i) or (iii) OR an entity whose articles of incorporation clearly state that it is a religiously motivated organization and whose religious beliefs are central to the organizations operating principles. AR, HI, & NC define religious employers as a nonprofit that is organized for religious purpose, primarily employs person who share the religious tenets of the entity, and serves primarily persons who share the religious tenets of the entity. CA, NY, & OR define religious employers as non-profit organizations described in section 6033(a)(3)(A)(i) or (iii). CT, MA, ME, NJ, RI define religious employers as “qualified church-controlled organizations” as defined in 26 USC 3121. DE, MD, NM, & TX state statutes do not define what is considered a religious employer. ^Mirroring the current federal regulations, DC allows for religiously affiliated nonprofits and closely held for-profits to request an accommodation which requires the group health insurer issuer to provide separate payments for contraceptive products and services without imposing any fee or cost-sharing to the employer or policy holders. † IL allows any employer with a moral or religious objection to have an exemption. # MA only allows houses of worship and church controlled organizations to be eligible for an exemption. ¥ MO allows any entity with a moral or religious objection to have an exemption. € NV does not exempt any employers but allows religious insurers to exclude contraceptive coverage. ‡ NY requires the insurer to offer a rider to policy holders so that women will have contraceptive coverage *WV defines religious an entity whose sincerely held religious beliefs or sincerely held moral convictions are central to the employer's operating principles, and the entity is an organization listed under 26 U.S.C. 501 (c)(3), 26 U.S.C. 3121, or listed in the Official Catholic Directory published by P.J. Kennedy and Sons State and Federal Contraceptive Coverage Requirements: Implications for Women and Employers 9 Endnotes 1 U.S. Equal Employment Opportunity Commission. December 14, 2000. Decision- Contraception. 2 DC’s law becomes effective April 17, 2018. 3 Kaiser Family Foundation and Health Research Educational Trust, 2017 Employer Health Benefits Survey. 4 After the Supreme Court ruling in Burwell v. Hobby Lobby, the Obama administration issued new regulations, extending the accommodation to closely held for profit corporation. The regulations define closely held corporation as an entity that 1) is not a nonprofit, 2) has no publicly traded ownership interests, and 3) has more than 50 percent of the value of its ownership interest owned directly or indirectly by five or fewer individuals. 45 CFR §147.131 (b)(4) 5 The Little Sisters of the Poor (LSOP), a religiously-affiliated nursing home that challenged the accommodation under the Obama Administration regulations, requested party status as an intervenor in both the PA and CA cases. The California Northern District Court granted the LSOP party status, the Pennsylvania Eastern District Court denied the LSOP request for party status. The LSOP have appealed the Pennsylvania Eastern District Court decision to deny them party status. The California Northern District Court also granted March for Life Education and Defense Fund, a nonprofit with moral objections to some contraceptive methods, party status. As parties in the case, the LSOP and March for Life Education and Defense Fund have appealed the California Northern District Court decision issuing the preliminary injunction. 6 Kaiser Family Foundation analysis of state laws, and Insurance Coverage of Contraceptives, State Policies in Brief, as of March 1, 2018, Guttmacher Institute. 7 DC’s law becomes effective April 17, 2018. 8 Massachusetts’s law becomes effective May 2018. 9 Maine’s law becomes effective January 2019. 10 Oregon’s law becomes effective January 2019. 11 Washington’s law becomes effective January 2019. 12 Ariz. Rev. Stat. Ann. § 20-826Y, Ariz. Rev. Stat. Ann. § 20-1057.08A(1)–(2), Ariz. Rev. Stat. Ann. § 20-1402L(1)– (2), Ariz. Rev. Stat. Ann. §20-1404U(1)–(2), Ariz. Rev. Stat. Ann.§ 20-2329A(1)–(2). 13 Conn. Gen. Stat. Ann. § 38A-503e, Conn. Gen. Stat. Ann. § 38A-530e 14 NH Rev. Stat. sec. 420-B:8-gg, NH Rev. Stat. sec. 415:18-I, NH Rev. Stat. sec. 420A:17-c 15 NJ Stat. Ann. § 17:48-6ee, NJ Stat. Ann. § 17:48a-7bb, NJ Stat. Ann. § 17:48E-35.29, NJ Stat. Ann. § 17:48F- 13.2, NJ Stat. Ann § 17B:26-2.1y, NJ Stat. Ann. § 17B:27-46.1ee, NJ Stat. Ann. § 17B:27A-7.12, NJ Stat. Ann. § 17B:27A-19.15, NJ Stat. Ann. § 26:2J-4.30, NJ Stat. Ann. § 52:14-17.29j 16 NM Stat § 59A-22-42, NM Stat. Ann. § 59A-46-44 17 RI Gen. Laws § 27-19-48(b)–(d), RI Gen. Laws § 27-18-57(b)–(e), RI Gen. Laws § 27-20-43(b)–(d), RI Gen. Laws § 27-41-59(b)–(d)