Department of Labor – Page 3 – ERISA Benefits Law

Final Rules Regarding Religious Accommodation of Contraceptive Coverage Mandate

On July 14, 2015 the IRS, DOL and HHS will jointly issue final rules regarding no additional cost preventive services, including contraceptive services, under the Affordable Care Act.

The final rules maintain the existing accommodation for eligible religious nonprofits, but also finalizes an alternative pathway for eligible organizations that have a religious objection to covering contraceptive services to seek an accommodation from contracting, providing, paying, or referring for such services. The rules allow these eligible organizations to notify HHS in writing of their religious objection to providing contraception coverage, as an alternative to filling out the form provided by the Department of Labor (EBSA Form 700) to provide to their issuer or third-party administrator. HHS and the DOL will then notify insurers and third party administrators of the organization’s objection so that enrollees in plans of such organizations receive separate payments for contraceptive services, with no additional cost to the enrollee or organization, and no involvement by the organization.

The alternative notice must include:

the name of the eligible organization and the basis on which it qualifies for an accommodation;
its objection based on sincerely held religious beliefs to covering some or all contraceptive services, as applicable (including an identification of the subset of contraceptive services to which coverage the eligible organization objects, if applicable);
the plan name and type; and
the name and contact information for any of the plan’s third party administrators and health insurance issuers.

The departments issued a model notice to HHS that eligible organizations may, but are not required to, use.

Nothing in this alternative notice process (or in the EBSA Form 700 notice process) provides for a government assessment of the sincerity of the religious belief underlying the eligible organization’s objection.

In addition, the final rules provide certain closely held for-profit entities the same accommodations. Relying on a definition used in federal tax law, the final rules define a “closely held for-profit entity” as an entity that is not publicly traded and that has an ownership structure under which more than 50 percent of the organization’s ownership interest is owned by five or fewer individuals, or an entity with a substantially similar ownership structure. For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual. The rules finalize standards concerning documentation and disclosure of a closely held for-profit entity’s decision not to provide coverage for contraceptive services.

The final rules also finalize interim final rules on the coverage of preventive services generally, with limited changes.

Final Rules

Model Notice

DOL Provides Timing Relief for Fee Disclosures in Participant-Directed Individual Account Plans

On March 19, 2015 the Department of Labor issued final rules that give retirement plan administrators a two-month window in which to provide annual fee disclosures to plan participants. Under existing regulations, plan administrators must provide fee disclosures to participants in plans with individually directed accounts at “at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis”. This 12-month rule presents some administrative difficulty because Plans that provide the disclosures in the same month every year could easily run afoul of the regulatory language if their disclosures are not done on the exact same day of the month each year.

The new rule replaces “12-month period” with “14-month period”, giving plan administrators a two month window each year in which to make the disclosures The new rules will become effective on June 17, 2015 (unless the DOL gets significant adverse comments on the rule, which is not expected). In the meantime, the DOL indicates that for enforcement purposes plan administrators can rely on the new rule immediately.

Final Rule

Final Rule Expanding Excepted Benefits to Include Limited Wrap Around Coverage

The U.S. Departments of Labor (DOL), Health and Human Services (HHS), and Treasury published final rules on March 18, 2015 to amend the definition of excepted benefits to include certain limited coverage that wraps around individual health insurance. The significance of this is that plans providing excepted benefits do not need to comply with many provisions of ERISA and the Tax Code (such as HIPAA and the Affordable Care Act Coverage Mandates).

To qualify as excepted benefits under the new rules, “wrap around” coverage would have to be specifically designed to provide meaningful benefits such as coverage for expanded in-network medical clinics or providers, reimbursement for the full cost of primary care, or coverage of the cost of prescription drugs not on the formulary of the primary plan.

In addition, under the final rules group health plan sponsors may, in limited circumstances, offer wraparound coverage to employees who are purchasing individual health insurance in the private market, including in the Health Insurance Marketplace. The final rule sets forth two pilot programs for limited wraparound coverage. One pilot allows wraparound benefits only for multi-state plans in the Health Insurance Marketplace. The other allows wraparound benefits for part-time workers who enroll in an individual health insurance policy or in Basic Health Plan coverage for low-income individuals established under the Affordable Care Act. These workers could, under existing excepted benefit rules, qualify for a flexible spending arrangement alternative to this wraparound coverage.

The Final Rule

Additional Background Information:

There are four categories of statutorily excepted benefits.

The first category includes benefits that are generally not health coverage (such as automobile insurance, liability insurance, workers compensation, and accidental death and dismemberment coverage). The benefits in this category are excepted in all circumstances. In contrast, the benefits in the other categories are types of health coverage but are excepted only if certain conditions are met.

The second category of excepted benefits is limited excepted benefits, which may include limited scope vision or dental benefits, and benefits for long-term care, nursing home care, home health care, or community based care.

The third category of excepted benefits, referred to as “noncoordinated excepted benefits,” includes both coverage for only a specified disease or illness (such as cancer-only policies), and hospital indemnity or other fixed indemnity insurance. In the group market, there benefits are excepted only if all of the following conditions are met: (1) the benefits are provided under a separate policy, certificate, or contract of insurance; (2) there is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and (3) the benefits are paid with respect to any event without regard to whether benefits are provided under any group health plan maintained by the same plan sponsor.

The fourth category of excepted benefits is supplemental excepted benefits. Such benefits must be: (1) coverage supplemental to Medicare, coverage supplemental to the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) or to Tricare, or similar coverage that is supplemental to coverage provided under a group health plan; and (2) provided under a separate policy, certificate, or contract of insurance.

New FMLA Rule Defining “Spouse” Based on Marriage “Place of Celebration” Rather Than Employee’s “State of Residence”

On February 25, 2015, the Department of Labor published updated FMLA rules pursuant to which employees in legal, same-sex marriages, regardless of where they live, will have the same rights as those in opposite-sex marriages to federal job-protected leave under the Family and Medical Leave Act (FMLA).

Originally enacted in 1993, the FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. Employees are, for example, entitled to take FMLA leave to care for a spouse who has a serious health condition.

This rule change updates the FMLA regulatory definition of “spouse” so that an eligible employee in a legal same-sex marriage will be able to take FMLA leave for his or her spouse regardless of the state in which the employee resides. The new rules are effective March 27, 2015. Previously, the regulatory definition of “spouse” did not include same-sex spouses if an employee resided in a state that did not recognize the employee’s same-sex marriage. Under the new rule, eligibility for federal FMLA protections is based on the law of the place where the marriage was entered into.

This “place of celebration” rule brings FMLA into alignment with the rules applicable to qualified retirement plans since the Supreme Court’s Windsor decision in 2013.

We recommend that employers review and update their FMLA policies to ensure compliance with the new rules. In addition, while it is still theoretically permissible for employers to use a different definition of “spouse” for purposes of welfare benefit plans, such as medical, dental, life, and disability (because ERISA does not require spousal coverage under those plans), we recommend that employers seriously consider aligning their definition of “spouse” for all purposes.

The Final Rule

DOL FAQs

DOL Fact Sheet