Supreme Court Green Lights Expansion of Exemption to Affordable Care Act’s Contraceptive Coverage

July 8, 2020

Today, in Little Sisters of the Poor Saints Peter and Paul Home, et al. v. Pennsylvania, et al., the United States Supreme Court upheld the expansion of the religious exemption to the contraceptive mandate set forth in the regulations to the Affordable Care Act (“ACA”). Briefly, the Court said that the administrative agency tasked with establishing ACA guidelines had the authority to promulgated a broader religious exemption and add a moral exemption, as well.

As background, the ACA itself does NOT contain a mandate that employers provide health insurance plans that cover contraception. The ACA requires covered employers to provide women with “preventative care and screenings” without “any cost sharing requirements.” But the ACA places the responsibility of deciding what such care and screenings include on the Health Resources and Services Administration (“HRSA”), the executive agency responsible for administering the ACA. Pursuant to that authority, in 2010, the HRSA issued guidelines which required health plans to provide coverage for all FDA-approved contraceptive methods and sterilization procedures. This is what is often referred to as the ACA’s “contraceptive mandate”.

Importantly, HRSA guidelines also have all along contained a religious exemption that allowed religious employers to opt out of the contraceptive mandate. The HRSA’s 2013 final rule provided an accommodation whereby eligible religious organizations who opposed providing contraceptive coverage could provide a self-certification to the health insurer that it was a non-profit entity that held itself out as a religious organization, and opposed providing contraceptive services on account of religious objections. In that case, the group health plan would exclude contraception from insurance coverage, and the insurer would make payments for contraceptive services to beneficiaries separate from the employer-provided health plan.

This accommodation was not adequate for some religious employers, and they challenged the self-certification as violating the Religious Freedom Restoration Act of 1993 (“RFRA”). Under the RFRA, a law that substantially burdens the exercise of religion must serve “a compelling governmental interests” and be the “least restrictive means of furthering the compelling governmental interest.” The Supreme Court never decided these challenges because the religious organizations and the government reached agreement that the exercise of their religious rights would NOT be violated if contraceptive coverage was provided to employees without any notice from the religious employers. In essence, they agreed there was a way to ensure religious freedom AND contraceptive coverage.

Despite this agreement, other religious organizations raised a different challenge, claiming that the mandate itself (verses the self-certification piece) violated the RFRA. In the 2014 decision Burwell, et al. v. Hobby Lobby Stores, Inc., the Supreme Court agreed, holding that the contraceptive mandate, standing alone, violated the RFRA as applied to religious organizations (including closely held corporation with sincerely held religious objections to providing employees with certain methods of contraception).

Expanding on Hobby Lobby, the HRSA of the Trump administration promulgated two additional exemptions to the contraceptive mandate. The first exemption expanded the definition of who constitutes a religious employer and what they must cover, and the second added a moral exemption to the contraceptive coverage. The broader religious exemption provides that employers (including for-profit and publicly traded entities) who “object…based on…sincerely held religious beliefs…to…establishing, maintaining, providing, offering or arranging [for] coverage or payments for some or all contraceptive services” need not comply with the contraceptive mandate. The new “moral exemption” provides that employers (including non-profits and for-profits with no publicly traded components) with “sincerely held moral” objections to providing some or all forms of contraception, also do not have to comply.

The Supreme Court ruled today that these two exemptions were properly promulgated by the HRSA. The Court reasoned that the broad language of the ACA which gives exclusive discretion to the HRSA to define what constitutes “preventative care and screenings” also gave the agency broad discretion to create religious and moral exemptions. Given that authority, the Supreme Court said that broader religious exemption and new moral exemption were valid. The Supreme Court also said that the failure of HRSA to follow certain procedures when promulgating the new exemptions was not a basis to strike them down because there was no prejudicial error to the extent all interested parties had proper notice and time to comment.

As the law currently stands, therefore, exempt from the contraceptive mandate of the ACA are not just religious employers with complicity-based objections, but for-profit and publicly traded entities who have sincerely held religious objections to providing, offering or arranging for contraceptive coverage or payments, as well as non-profit and private, for-profit, employers with “sincerely held moral” objections to providing contraception. But it is important to note that because these exemptions were established by an administrative agency verses by statute, they could be expanded further or eliminated altogether with a different Presidential administration. The Supreme Court also noted that it was not ruling on the constitutionality of the exemptions as they had not been challenged on that basis. This too remains another area where the law might develop in future cases. So as always, stay tuned!