Last night the Catholic Health Association issued a memo to its members announcing that the final rules governing the Obama administration's contraception-coverage mandate are workable. In June of last year, CHA strongly criticized--as did the U.S. Conference of Catholic Bishops--the way the Department of Health and Human Services had attempted to accommodate the concerns of religious employers who objected to the mandate. The USCCB is still not (and may never be) happy with the rule. But CHA now believes HHS has addressed their concerns.
“It was important for our members to achieve resolution of this issue in time for them to negotiate their insurance renewals and with the assurance they would not have to contract, provide, pay or refer for contraceptive coverage," Sr. Carol Keehan, president of CHA, told me. "We are pleased that that has been achieved with this accommodation.” From yesterday's memo:
Since the original rule was issued over a year ago, there has been considerable concern raised by many parties including CHA. CHA had two principal concerns. The first was the four-part definition of what constituted a "religious employer." That concern has been eliminated. CHA's second concern was establishing a federal precedent that mandated our members would have to include in their health plans, services they had well-established moral objections to.
HHS has now established an accommodation that will allow our ministries to continue offering health insurance plans for their employees as they have always done.
Given that CHA membership includes only nonprofit hospitals, it's not concerned with for-profit employers who object to the mandate. "We recognize the broader issues will continue to be debated and litigated by others." Still, "Throughout this process, CHA has been in dialogue with the leadership of the bishops conference, the administration, and HHS."
So what do the final rules say?
As CHA explained to its members, the final rules dispatch with the earlier, much-maligned four-part definition of a religious employer as one that is not for profit, primarily serves co-religionists, primarily employs co-religionists, and exists to inculcate religious values. That's been simplified. HHS lifted the new definition from the tax code. Any religious organization that's exempt from filing a Form 990 (which all other nonprofits must file with the IRS every year)--including churches, integrated auxiliary association, and the religious activities of any religious order--is completely exempt from the mandate. That is, they don't have to offer contraception coverage to their employees, and their employees are not eligible to receive it for free outside their employers' health plans.
In order to accommodate the objections of other kinds of religious groups, HHS created a class of "eligible organizations," which will not be required to cover contraception in their employee health plans, but whose workers can obtain such coverage from third-party providers. Which employers qualify? Religious nonprofits that object to covering contraception on religious grounds. All they have to do in order to get the accommodation is to self-certify that they qualify. They fill out a form, send one copy to their insurer and file away another for safekeeping, as required by the Employee Retirement Income Security Act. They don't have to send it to HHS or the IRS. (But should the government come calling, they do have to produce it.)
Once the insurer receives the form, the employer's work is done. The insurance company must then notify covered employees--separately from literature related to the main policy--that it will be paying for contraceptive services. (It's barred from adding fees to the employer's premiums in order to recoup costs--nor can the insurer allow the costs to be reflected in the premiums.) Rather than offer a separate contraception policy, as the previous dratf of the rules proposed, insurers must segregate the premiums it receives from "eligible organizations" from the funds they use to pay for contraception.
Now, some will surely object that this is nothing more than an "accounting gimmick." But this is precisely how states that cover elective abortions for Medicaid enrollees are able to receive federal dollars for the program. The Hyde Amendment bars federal money from funding elective abortions. The only way such states can receive federal money in compliance with that law is to create separate accounts for both funding sources. (Incidentally, when the bishops were lobbying against Obamacare, that was part of the status quo they said they supported.)
So-called self-insured eligible organizations are handled a bit differently. Those employers don't contract with insurance companies to cover for their employees' health-care services. They fund them directly, and pay a third-party administrator to manage the claims (administrators are often insurance companies). Such organizations simply send their self-certification form to the third-party administrator, which must state that the employer is not the claims administrator and cite the administrator's obligations under ERISA regulations. Again, employers don't have to send the form to any government agency. They just have to keep a copy in their files.
At this point, the third-party administrator has to decide whether it wants to handle the contraception services. If so, it's responsible for notifying employees (again, separately from any communications related to the main policy) that they will receive this coverage, and then it must arrange for the coverage, whether through its own network (if it's an insurance company), or by contracting with another provider. Third-party administrators that agree to this will be reimbursed for their costs.
This means that none of the money collected by self-insured religious employers that object to the mandate will pay for contraceptive services. And that none of the premiums paid by other objecting religious organizations will be used to cover such services. This is why, as I've written a few times before, it seems to me that Catholic employers can comply with the mandate without running afoul of Catholic moral teaching. (Indeed, at least one bishop has expressed cautious optimism about the previous version of the accommodation.)
In addition, if an "eligible organization" wants to exclude one form of contraptive services from its plan but not others, insurers (or third-party administrators) must honor that request, and offer the excluded coverage separately.
Religious employers have until January 1, 2014, to comply.