Contraception Insurance Coverage

10/28/2014

Everything Self-funded Employers Need to Know About Contraception Coverage But Are Afraid to Ask

 

If you hadn’t heard of Hobby Lobby before, you certainly have by now.  Not too long ago, it would have seemed bizarre to mention a chain of arts and crafts stores in a conversation about contraception, but when the founder’s staunch opposition of the provision in the Patient Protection and Affordable Care Act (ACA) mandating that companies provide access to emergency contraceptives and intrauterine devices (IUDs) rose to the Supreme Court, it forever linked the two in the minds of many people.  It also got people thinking about how they might be affected.

Self-funded employers may be wondering how they fit into the contraception coverage puzzle; however, there is no simple answer and clarification could still be far away.  In the meantime, an explanation of how these recent events currently affect self-insured employers and Third Party Administrators (TPAs) might shed some light on the situation.

 

How Did We Get Here?

When the United States Department of Health and Human Services (HHS) issued regulations allowing certain religious nonprofits to opt out of providing contraception coverage, it provided that these entities could instruct their insurance companies – or TPAs for self-funded employers – to provide and pay for the coverage directly. 

In July 2014, regarding the Hobby Lobby case, the Supreme Court expanded this universe when it ruled that closely-held for-profit businesses could cite religious objections to avoid providing contraception coverage. A month later, the Supreme Court agreed with Wheaton College that it didn’t have to complete the forms necessary to certify organizations as having religious objections to the coverage.

Meanwhile, HHS, continues to demonstrate its lack of understanding of the insurance industry, extending the same opt-out for religious nonprofits to these closely held for-profit businesses.  The result is that even more insurance companies and, in the case of self-funded organizations, TPAs would foot the bill for contraception coverage when qualified organizations objected to it. In the latter case, insurance companies would then reimburse the TPAs.

The problem, however, is that TPAs are not insurance companies, and they also aren’t getting reimbursed as the number of organizations objecting to contraception coverage on religious grounds continues to grow. 

This introduction just skims the thorny issues that everyone involved should be aware of. HHS, which sets these regulations, has not replied to requests to change the religious objection rule or method of reimbursing TPAs. The department cites the Wheaton College case as the reason for inaction, delaying enforcement of the objection certification process until appellate court review.

A Burden for TPAs and Self-insureds

The tangle of confused regulations began back in July of 2013, when HHS issued its final rules on women’s preventative services. It stated that non-profit religious organizations, such as hospitals, schools and charities, could opt-out of providing contraceptive coverage. To qualify, a non-profit religious organization had to “self-certify” to its insurer or, if self-funded, self-certify to its TPA to qualify as an “eligible organization.”

When an eligible, self-funded organization self-certifies, its TPA – if it decides to keep its business relationship with the organization – must do the following:

  • Provide for separate coverage for contraceptive services
  • Act as the ERISA plan administrator, which includes satisfying ERISA disclosure and claims procedure requirements for these services
  • Pay for these services at its own expense

TPAs are then required to seek reimbursement by contracting with insurers on the Federally Funded Exchange (FFE). In turn, it was expected insurers would receive an adjustment in their FFE user fees, and then use these savings to reimburse TPAs. This hasn’t happened. Since this 2013 ruling, TPAs, which traditionally serve self-funded plans, have footed the bill for millions of dollars in contraceptive services for their self-certified clients. 

Thus far, insurers have not reimbursed one TPA. However, even if reimbursed, there is no guarantee that the amount of any savings an insurer might receive would be enough to cover what a TPA pays out of its own funds. The result? TPAs continue to use more of their own funds to pay for these services, without any confidence they will ever be reimbursed. 

The black hole TPAs have found themselves in promises to become wider, as new proposed rules issued in August 2014 expanded the definition of an “eligible organization” to include closely-held for-profit corporations, such as Hobby Lobby. This undoubtedly will take a bigger bite out of TPAs, which will have to pay for more contraceptive services as the number of objectors grows.  

While TPAs continue to pay, HHS is taking comments about how to clearly define a closely-held for-profit company and how these companies would establish their religious objections.  Until a point is reached where everything is clearly defined, the confusion for both self-funded employers and TPAs will continue.  For now, it’s important to stay educated on the most recent proceedings and prepare yourself for even more change.

Contact Us

To learn more about how AmWINS can help you place coverage for your clients, reach out to your local AmWINS broker.  If you do not have a contact at AmWINS, please click here.

Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.

(c) 2017 AmWINS Group, Inc.

Most Popular Insights

Unpacking Warehouse Legal Liability

07/28/20

Warehouse legal liability is a complicated line with many gray areas and multiple interpretations of its coverages. This article discusses coverage triggers, legal vs. contractual liability and the importance of warehouse receipts.

5 Strategies for Successful Small Business Renewals During COVID

07/21/20

In the current economic climate, many small businesses are struggling and some may even fail. Despite these challenges and the continued hardening market, there is opportunity for retailers to write and retain business. This article provides guidance on navigating the complex small business marketplace and helps retailers fine tune their understanding of what insurable risks will look like over the next 12 to 24 months.

What Product Recall Insurance and Risk Mitigation Plan Is Right for Your Clients?

07/21/20

​Product recalls are one of the most damaging events a business may encounter. In order to effectively respond to an incident, companies must be prepared with proper risk management strategies. As policy wording varies, it's also critical to ensure your clients have the right policy type in place to appropriately address their first- and third-party exposures.

Is Your Insured’s Website Compliant with the Americans with Disabilities Act?

07/17/20

Court rulings, have extended the Americans with Disabilities Act (ADA) to apply to websites that are "heavily integrated" with and serve as a "gateway" to a physical stores/services. As a result, companies are now finding themselves targets for ADA claims based on the inaccessibility of their websites and media by those who are disabled.

State of the Market - Q2 2020

06/15/20

Our Q2 2020 State of the Market report provides a holistic view of highly impacted industry segments as well as overall market trends. This report is designed to help our retailers gain the knowledge they need to retain accounts, write new business, overcome challenges and capitalize on opportunities that do exist.

10 Catastrophe Claim Tips for Severe Weather Season

05/27/20

Severe weather can be unpredictable and strike at any time. Help your clients be prepared in the event their property is damaged by a hurricane, tornado, hailstorm or similar disaster with these 10 catastrophe claim tips.

On-Demand Webinar: COVID-19 Economic Impact and Future Outlook

05/15/20

As a result of the COVID-19 crisis, our industry is facing a broad array of challenges that impact insureds of every size and in every industry. In the first of a series of webinars, we hear from an economist on the financial impacts of COVID-19 and what we can expect in the future. This webinar is intended to complement your conversations with clients about how to plan for the next 12 to 24 months.

Lloyd's CEO and Property Underwriters Share COVID-19 Response and Market Update

05/11/20

This podcast features an update from John Neal, CEO of Lloyd’s, on the state of the Lloyd's market and their response to COVID-19 as well as a panel discussion with London Property underwriters on how they view the pandemic's impact both the Property sector and their syndicate's business.

Lloyd's CEO and Casualty Underwriters Share COVID-19 Response and Market Update

05/11/20

This podcast features an update from John Neal, CEO of Lloyd’s, on the state of the Lloyd's market and their response to COVID-19 as well as a panel discussion with London Casualty underwriters on how they view the pandemic's impact both the Casualty sector and their syndicate's business.

Lloyd's CEO and Professional Underwriters Share COVID-19 Response and Market Update

05/11/20

This podcast features an update from John Neal, CEO of Lloyd’s, on the state of the Lloyd's market and their response to COVID-19 as well as a panel discussion with London Professional Lines underwriters on how they view the pandemic's impact both the Professional Lines sector and their syndicate's business.

Flood 101: What to Know About Standard Flood Insurance

04/28/20

Ninety-eight percent of all United States counties were impacted by a flood event in 2018, yet many property owners remain unaware of their true risk of flood or what their existing policies cover. This article highlights key statistics about flood risk and outlines the differences between the National Flood Insurance Program and private market flood insurance.

Professional Lines Challenges and Market Response During the COVID-19 Crisis

04/28/20

The COVID-19 crisis has created a rapidly changing environment for the Professional Lines market. With the uncertainty of how claims will develop and the potential for increased exposure, retailers must be proactive. In this article, AmWINS specialists share their insights on why this is more important now than ever, including reactionary underwriting trends, D&O policy exclusions and impacts to EPLI, as well as the threat for increased cyber attacks and crime losses.

Small Business and Personal Lines During the COVID Crisis

04/22/20

Loss of revenue caused by stay-at-home orders due to the coronavirus pandemic has affected small businesses and the insurance industry serving them significantly. As retailers and carriers prioritize their focus to adapt to the “new normal” of daily transactions, underlying market dynamics remain unchanged. In this article, our experts share their insight on the current changes that we are seeing the small business and personal lines market, and how to navigate the market a this time of uncertainty.

Mind the Gap: COVID-19's Impact on the Logistics Industry

04/15/20

The disruptive impact of the COVID-19 outbreak on supply chains is already having a pronounced effect on the world of logistics and logistics insurance. Port closures, demand surges and production shifts are requiring nimble response to keep up with change. This article arms insurance brokers with the information needed to understand the changes taking place and plan for what is likely to occur in the months ahead.

Navigating the Casualty Market’s Response to COVID-19

04/15/20

The Casualty market’s response to COVID-19 is continuously evolving. With a wide array of factors already impacting this sector pre-crisis, segments of the Casualty marketplace are responding to the pandemic differently. In this article, our industry specialists share overall themes in the Casualty market and take a closer look at how various segments are being impacted.

Top COVID-19 Issues Impacting Builder’s Risk Insurance

04/15/20

The COVID-19 pandemic is causing historical disruption to the construction industry. These changes mean that risk mitigation strategies need to be implemented or revisited, policy language should be reviewed, and carriers should be apprised of all changes at the work-site. In this article, AmWINS specialists examine the major areas of concern for Builder’s Risk insureds, including government-mandated shutdowns, supply chain-driven slowdowns and policy wording that could limit coverage, and provide guidance for retailers to achieve the best results for their clients.

State of the U.S. Logistics Insurance Market

04/10/20

For decades, the logistics insurance market has been considered a sub-market of the cargo or ocean marine market. However, the continual rise of e-commerce and its effect on the global supply chain has carved out a complex and expansive industry niche. This article provides insight into the various lines of coverage, the specialized underwriting approach, and rate surges within the U.S. logistics insurance market.

Lloyd’s & the London Market’s Response to COVID-19

04/06/20

During the COVID-19 pandemic, Lloyd’s remains open for business and syndicates have successfully transitioned to working from home. However, there are notable changes in how the London market is approaching business. In this article, specialists from THB, AmWINS’ London broker, share their insight on consistent themes across the London Market as well as updates on various lines of business.

COVID-19 Claims Advice

04/02/20

There have been a lot of questions regarding COVID-19, in particular about coverage and claims handling. This claims advice is intended to offer guidance to help our retail clients through these difficult times.

Insurance Impacts of COVID-19 on the Healthcare and Senior Living Industry

03/30/20

As the healthcare industry remains on the front lines of battling the COVID-19 pandemic, staying abreast of the changing landscape and how the insurance market is adapting is critical to ensure new exposures are covered and renewals are successfully placed. In this article, our specialists share what they are seeing in the Healthcare and Senior Care markets, tips for risk control and mitigation, and how to get the best results for insureds.

Sign Up For Our Monthly Newsletter

Sign Up