Obamacare Update: Employers Don’t Have to Pay for Contraceptives

from nolo.com

Do for-profit corporate employers have to provide contraceptive coverage to their employees under the Affordable Care Act (known more commonly as Obamacare)? In the case of Burwell v. Hobby Lobby Stores, the Supreme Court has said they do not, if providing contraception violates the corporate owners’ religious beliefs.

The Employer Mandate

The Affordable Care Act requires larger employers to provide employees with affordable health care benefits that meet certain minimum coverage requirements or pay a penalty. Employers are subject to the mandate if they have at least 50 full-time or full-time-equivalent employees. An employee counts as full time if he or she works at least 30 hours per week. This same definition applies when determining which employees are entitled to benefits: Only full-time (30 hours per week) employees must receive benefits. (To learn more, see Understanding the Employer Mandate in Healthcare Reform.)

The mandate kicks in at the beginning of 2016 for employers with 50 to 100 full-time employees; larger employees must provide coverage by the start of 2015, by they don’t have to cover all employees to begin with. For more information on when the mandate applies, see When does the employer mandate go into effect?

Both of the companies that brought the Burwell case are large enough to be subject to the employer mandate.

Contraceptive Coverage

The coverage employers must provide under the mandate has to meet certain minimum standards. Among other things, employer health plans must cover certain preventive services, without annual or lifetime dollar limits, and without any cost-sharing requirements. Among these services are women’s preventive care and screenings, which include access to all methods of contraception approved by the Food and Drug Administration (FDA).

The two companies that brought the Burwell case objected to four of those contraceptive methods, including “morning after” pills and intrauterine devices (IUDs), because the business owners believe these methods can be “abortifacients”: that is, that they can affect an egg that has already been fertilized. Because the business owners believe that life begins at conception, they argued that the employer mandate illegally requires them to violate their religious beliefs against abortion.

The Burwell Decision

Two corporations brought the Burwell lawsuit: Hobby Lobby Stores and Conestoga Wood Specialties. Both corporations are closely held by the families who founded them, and neither is publicly traded. Both corporations argued that their religious beliefs preclude them from facilitating employee access to certain contraceptives, as described above. They claimed that the employer mandate illegally forced them to choose between violating their religious precepts or paying a substantial financial penalty.

The Court sided with the employers. First, the Court found the for-profit corporations were protected, as “persons,” under the federal Religious Freedom Restoration Act (RFRA). Under RFRA, the government may not substantially burden a person’s religious freedom unless it has a compelling governmental interest in doing so and has chosen the least intrusive means to further that compelling interest. In finding that corporations fall within the definition of persons (something the Court has done in other contexts recently, including campaign finance reform cases), the Court found that they also have these protectable religious freedom rights under the law.

The Court quickly found that requiring these employers to provide contraception was a substantial burden, and assumed for the sake of argument that the government had a compelling reason to impose the requirement. So the question came down to whether the government had chosen the least restrictive way to satisfy its compelling purpose.

The Court found that it had not. The Affordable Care Act includes an explicit exception for religious nonprofit employers who object to providing contraception. These employers can inform their insurance carriers of their objection; the insurance carrier must then exclude contraceptive coverage from the employer-provided plan and instead provide that coverage through separate payments. The Court found that the existence of this exception demonstrated that there was a less restrictive way to satisfy the government’s interests. Therefore, the Court decided that RFRA prevented the government from requiring closely held corporations to provide contraception, if doing so violates their religious beliefs.

What’s Next for Employees and Employers?

It’s not entirely clear how the Burwell decision will play out in the workplace, at least for employers. For employees, the Court’s decision will not change their benefits. Employees are still entitled to affordable health coverage that meet the minimum standards set by law, including contraceptive services. Although an employer that objects to providing these services will not have to pay for them, the employee’s insurance provider still must make them available.

For employers, the Court’s decision means that companies with religious objections to providing contraception will not have to pay for it. However, the Court didn’t spell out exactly what process must be followed to ensure that employees still get these benefits. Must employers notify their insurance providers that they object to paying for contraception? Must employers notify the government of their objections? What about employers who have religious objections to other aspects of Obamacare, such as vaccinations? And who will pay for the benefits employers object to providing, the government or the insurance carrier? Answers to these questions will depend on further court decisions and regulatory action.

The larger question, which has many employee rights advocates worried, is what this decision means for other workplace protections. The Burwell case could be read to allow employers to avoid a variety of employment laws, from those prohibiting discrimination to those regulating wages and work hours, as long as they have an objection based in religion. Laws prohibiting discrimination based on sex and sexual orientation in the workplace could be particularly at risk, given the stance of many traditional religions on gender roles and homosexuality. If an employer claims a religious objection to these laws, may the government still enforce them?

Like many Supreme Court decisions, the Burwell case may have unsettled more issues than it resolved. We’ll have to wait and see how courts, government agencies, and Congress respond.