Employers Dropping Birth Control Must Notify Employees

In the wake of the U.S. Supreme Court’s Hobby Lobby decision the DOL, IRS and HHS have jointly issued guidance addressing preventive health services.

According to the guidance closely held companies that drop insurance coverage of birth control for religious reasons have 60 days to inform their employees.

The guidance indicates that, for ERISA plans, long-standing DOL regulations require that SPDs (Summary Plan Document) include a description of the extent to which preventive services are covered under the plan. As a result, if an ERISA plan excludes some or all of contraceptives, the plans SPD must reflect the extent of the exclusion. This in turn per ERISA would necessitate a SMM (Summary of Material Modification) or updated SPD.

The July 17,2014 guidance is as follows:

Disclosure with respect to Preventive Services

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.

Prior FAQ’s and ACA information can be located at the DOL’s Affordable Care Act page here.

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About Christopher Johnson

Christopher manages the consulting services department of J.W.Terrill providing regulatory, analytical, technical and wellness support to clients.

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