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Rulemaking Input Sought for Contraceptive Coverage

April 3, 2012

On March 16, 2012, the Departments of Treasury, Labor, and Health and Human Services (the Agencies) issued an advance notice of proposed rulemaking (ANPRM) to develop alternative ways organizations objecting to coverage of contraceptive services for religious reasons can fulfill PPACA’s requirements to provide these services.

Specifically, the Agencies are seeking input in advance of proposed rulemaking on the potential means of accommodating such organizations while ensuring access to “cost-free” contraceptive coverage. Comments are due by June 19, 2012 or 90 days after publication in the March 21, 2012 Federal Register which also contains alternative methods for providing comments.

The following is a summary of proposed approaches for administering and funding contraception coverage for fully-insured and self-insured plans.

Fully-Insured Coverage

Administration:
Insurance issuers providing coverage to religious organizations eligible for an accommodation may not include contraceptive coverage in that organization’s insured coverage.

Instead, the issuer would be required to provide participants and beneficiaries covered under the plan separate coverage for contraceptive services, potentially as excepted benefits, without cost sharing, and notify plan participants and beneficiaries of its availability.

To avoid potential obstacles from other Federal requirements, the Agencies are soliciting input as to whether contraceptive coverage should be added to list of excepted benefits in the individual market, and if yes, how to structure such a change to the excepted benefits regulations.

Funding: Issuers would pay for contraceptive coverage from the estimated savings from the elimination of the need to pay for services that would otherwise be used if contraceptives were not covered.

Self-Insured Coverage

Administration: Under the proposal, the third-party administrator (TPA) for a religious organization’s self-insured group health plan would be designated as the plan administrator for ERISA purposes. As plan administrator, the TPA would provide or arrange for contraceptive coverage in such circumstances, as well as notify participants and beneficiaries of the availability of this coverage.

Funding: The ANPRM seeks comment on possible approaches that a TPA could use to fund contraceptive coverage without using funds provided by the religious organization, including:

  • Using revenue not already obligated to plan sponsors such as drug rebates, service fees, disease management program fees, or other sources;
  • Receiving funds for these services from private, non-profit organizations;
  • Receiving a credit or rebate on the amount that it pays for these services from the PPACA reinsurance program; or
  • Arranging for contraceptive services through an independent entity. Under this proposal, OPM could require multi-state insurers to provide the benefit for the plan – costs could be covered by a credit against any user fees such an insurer would be required to pay in order to offer coverage on the Exchanges.

In addition to the above proposals, the Agencies encourage other ideas on options for the source of funds for contraceptive coverage, including the use of individual tax-preferred accounts or public funding. You and your clients are encouraged to submit your comments in advance of the proposed rulemaking.  



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