Departments Issue FAQ on Disclosure of Change in Contraceptive Coverage

1. July 22, 2014
Health Care Reform Update: Week of July 21
Departments Issue FAQ on Disclosure of Change in Contraceptive Coverage
On July 17, 2014, the Departments of Labor, Health and Human Services (HHS) and the Treasury
(collectively, the Departments) published an additional Frequently Asked Question (FAQ) addressing
application of the U.S. Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc. As
reported in the June 30, 2014 News Flash and in the July 1, 2014 Health Care Reform Update, the
Supreme Court ruled on June 30, 2014 that regulations issued by the HHS implementing no cost
sharing for women’s contraceptive benefits under the Patient Protection and Affordable Care Act
(PPACA) violated the Religious Freedom Restoration Act of 1993 (RFRA) with regard to for-profit
closely-held corporations who assert that such mandates violate the owners’ sincere religious beliefs.
The FAQ reminded employers who are for-profit closely held corporations and who are considering
reducing or eliminating contraceptive coverage under their plans of their obligation to include in their
SPDs a description of the extent to which preventive services (including contraceptive services) are
covered under the plan. If a for-profit closely held corporation plan sponsor reduces or eliminates
contraceptive coverage under its plan after having provided such coverage, the plan’s SPD must
describe the extent of the limitation or exclusion of coverage and follow the ERISA expedited
disclosure requirements for material reductions in covered services or benefits. Under those
requirements, the plan must send a notice to employees not later than 60 days after the date of the
adoption of the modification or change to the plan that is a material reduction in covered services or
benefits. Other disclosure requirements may also apply, for example, under state insurance law
applicable to health insurance issuers.
The July 15, 2014 Health Care Reform Update addressed the question of whether the Hobby Lobby
decision applies to non-profit closely held corporations. It was noted that there is very little that
distinguishes a non-profit closely held corporation from a for-profit closely held corporation, and that
it seemed clear that the Supreme Court would not differentiate the two types of corporations for
purposes of applying the RFRA to the PPACA contraceptive mandate. Based on the above guidance,
it appears that the Departments are viewing the question differently and have adopted a very narrow
reading of the Supreme Court’s decision. It seems apparent, therefore, that the federal government is
not ready at this time to concede that the relief from the contraceptive mandate provided under the
Hobby Lobby ruling can be extended to non-profit closely held corporations.
Willis’ National Legal & Research Group will continue to review and provide timely updates on these
and other related changes in Health Care Reform that affect employers.
This information is not intended to represent legal or tax advice and has been prepared solely for informational
purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.