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Recent US Supreme Court Ruling Allows Employers to Opt Out of Birth Control Coverage

on Tuesday, 28 July 2020 in Labor & Employment Law Update: Sarah M. Huyck, Editor

On July 8, 2020, in a 7-2 ruling, the US Supreme Court held in Little Sisters of the Poor v. Pennsylvania that employers with a “religious or moral objection” to contraceptives may opt out of providing contraceptive coverage to their employees, without penalty, under the Affordable Care Act (ACA). The Supreme Court came to this conclusion by upholding two final rules promulgated in 2017 by the Departments of Health and Human Services, Labor, and Treasury. The Departments’ first rule significantly expands the definition of an “exempt religious employer” to include employers that object, based on “sincerely held religious beliefs,” to establishing, maintaining, providing, offering, or arranging for coverage or payments for contraceptive services. The Department’s second rule creates a similar moral exemption for employers.

Little Sisters of the Poor is the latest decision in a line of recent Supreme Court decisions surrounding the “contraceptive mandate” of the ACA. Although the ACA itself does not explicitly require contraceptive coverage, it does require employers to provide women with “preventive care and screenings” without any cost sharing requirements. The “contraceptive mandate” comes from guidelines adopted in 2011 after the ACA’s passage, mandating preventive care and screenings, including all FDA-approved contraceptive methods.

After passage of the “contraceptive mandate” President Obama’s administration adopted a religious exemption for churches, conventions or associations of churches, integrated auxiliaries, or “the exclusively religious activities of any religious order” (the “Church Exemption”).  To qualify for the Church Exemption, a qualified religious organization had to self-certify, using an ERISA Form 700, to their insurers or third-party administrators (“TPAs”) that they objected to providing coverage for contraceptive services to their employees.  The insurers or TPAs then provided coverage for contraceptives to employees at no cost.  Despite these exemptions and rules, however, many religious organizations voiced concerns that the Church Exemption was too narrow and that the self-certification rule still required employers to be complicit in the distribution of contraceptives.

The interim final rule, as upheld in Little Sisters of the Poor, was aimed at ending the decade-long push and pull between religious exemptions and broadly available contraceptive coverage. In summary, the new exemptions to the contraceptive mandate will now apply to:  

  • Any organization that objects to providing coverage based on sincerely held religious beliefs (including churches, nonprofits, private for-profit entities, publicly traded for-profit entities, and closely held for-profit entities); and
  • Any organization that objects to contraceptive coverage based upon sincerely held moral objections. Publicly traded entities are not eligible for this exception.

The new rules permit employers to take advantage of these exemptions without accommodating employees by using the self-certification process.  Employees of objecting employers who do not self-certify will have to look elsewhere for contraceptives.  Note, however, that Little Sisters of the Poor did not eliminate the self-certification rule, and employers can still elect to self-certify their objections and thereby offer employees contraceptive coverage indirectly.

Importantly, these rules may be subject to change in coming months and years. In her concurring opinion, Justice Kagan discussed the possibility the 2017 exemptions could still be struck down, on other grounds, by the lower court. Additionally, the exemption rules could change with another change in administration.

Morgan L. Kreiser

Clare Haney, Summer Associate

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500

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