It seems like one of the hardest parts of ACA compliance is waiting for guidance on specific issues. However, after the decision in Hobby Lobby, the DOL promptly issued FAQ Part XX that addresses the notice requirements for employers who cease providing contraceptive services. The FAQ has a single question and is reprinted below in its entirety:
“Q: My closely held for-profit corporation’s health plan will cease providing coverage for some or all contraceptive services mid-plan year. Does this reduction in coverage trigger any notice requirements to plan participants and beneficiaries?
Yes. For plans subject to the Employee Retirement Income Security Act (ERISA), ERISA requires disclosure of information relevant to coverage of preventive services, including contraceptive coverage. Specifically, the Department of Labor’s longstanding regulations at 29 CFR 2520.102-3(j)(3) provide that, the summary plan description (SPD) shall include a description of the extent to which preventive services (which includes contraceptive services) are covered under the plan. Accordingly, if an ERISA plan excludes all or a subset of contraceptive services from coverage under its group health plan, the plan’s SPD must describe the extent of the limitation or exclusion of coverage. For plans that reduce or eliminate coverage of contraceptive services after having provided such coverage, expedited disclosure requirements for material reductions in covered services or benefits apply. See ERISA section 104(b)(1) and 29 CFR 2520.104b-3(d)(1), which generally require disclosure not later than 60 days after the date of adoption of a modification or change to the plan that is a material reduction in covered services or benefits. Other disclosure requirements may apply, for example, under State insurance law applicable to health insurance issuers.”
First, for reasons I laid out in a prior entry, I am not suggesting companies immediately take this step. But a couple of things about this FAQ that are worth noting if a plan sponsor is considering eliminating contraceptive coverage. One, the question references a “closely held for-profit company” which pretty clearly indicates that the DOL is applying a very narrow reading of the Court’s decision and non-closely held companies would be in for a fight later. Second, if the company is eliminating contraceptive coverage, it has to follow the ACA and ERISA notice requirements for plan changes. The change is not immediate and can only be completed after the appropriate notification time periods. Simply eliminating the coverage will not do.
Second, this FAQ demonstrates how court decisions, particularly Supreme Court decisions, will continue to impact ACA compliance going forward. That is why it is important for plan sponsors to continue to watch for change and guidance to increase the possibility of proper implementation of an ACA compliant plan. Be informed, be flexible and be prepared.