The Affordable Care Act, Grandfathered Plans, and the Contraceptive Mandate

The Affordable Care Act, Grandfathered Plans,

and the Contraceptive Mandate

 

            The many challenges being brought by for-profit ventures they being exemplified by Hobby Lobby and Conestoga Wood, to the “contraceptive mandate” will be heard by the U.S. Supreme Court on March 25.  Those companies assert that the requirement that employee health insurance plans cover, on a no cost sharing basis, FDA approved contraceptives lack a “compelling interest” because so many plans, those that are “grandfathered,” are exempt.  For that reason it is important to understand what is and is not the effect of grandfathering. 

            Initially, the ACA requires that employer health insurance plans provide, on a no cost sharing basis, a variety of preventative care services. One, and only one, of those preventative care services is the coverage of FDA approved contraceptives.  There is no particular requirement that the plans cover contraceptives, but rather there is a requirement that the plans cover a class of goods and services of which contraception is a component.

            Plans which are grandfathered are exempt from a variety (albeit not all) of the requirements of the ACA  One of those exemptions is that grandfathered plans are not required to, on a no cost sharing basis, cover the same preventative services as are required of plans subject to the ACA.  In order for a plan to be grandfather it must essentially have not been amended or altered (e.g., reduced coverage, increased premiums) since the enactment of the ACA.  See Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 34,538, 34,540 (June 17, 2010) (listing requirements for maintaining grandfathered status).  See also 26 C.F.R. § 54.9815-2714T(g) (2010)) (limited exemption of grandfathered plans from requirement to cover children to the age of 26).  The exact number of grandfathered plans as of any point in time is unknown.  Hence, while the possibility of grandfathered status is real, its actual utilization is unknown as to either the number of plans or the number of plan beneficiaries. 

            Even were reliable data as to the number of either grandfathered plans or the number of beneficiaries of grandfathered plans available, it would not follow that they do not provide/are not provided preventative care benefits, including contraception.  Many states have for years required that insurance policies issued in that state cover contraception.  See, e.g., State Policies in Brief: Insurance Coverage of Contraceptives, Guttmacher Inst., http://www.guttmacher.org/pubs/spib_ICC.pdf.  Hence, it must be expected that a grandfathered plan in one of those states will cover contraception.  True, that coverage might not be on a no cost sharing basis as is required by plans subject to the ACA, but there is coverage none the less.  Recall that Hobby Lobby, Conestoga Wood et al. are objecting not to contraceptive coverage on a no cost sharing basis, but to providing contraceptive coverage ab initio.

          Further, even in those states that do not by state law mandate coverage of contraception, there has been in place since 2000 an Equal Employment Opportunity Commission (EEOC) pronouncement that employers must cover the expenses of prescription contraceptives to the same extent they cover the expenses of other types of drugs and preventive care.  See EEOC Decision on Coverage of Contraception (Dec. 14, 2000), available at http:// www.eeoc.gov/policy/docs/decision-contraception.html. It must be expected that many employers (as well as insurers) structured their plans to comply with this directive.  Other employers will have added contraceptive coverage to their sponsored plans for purely economic reasons.

            Consequently, even a complete listing of the grandfathered plans and a counting of the plan beneficiaries would not identify those without contraceptive coverage. Rather, from that unknown universe there would need to be deleted those beneficiaries who are any of:

(i)         resident in a state mandating contraception coverage;

(ii)        provided, consequent to either the EEOC direction or a court ruling, contraceptive coverage; or

(iii)       consequent to individual plan structure otherwise provided contraceptive coverage.

            Until the various plaintiffs who cite the scope of the grandfathering exemption are able to actually quantify its impact, a task that likely is impossible, they should not be permitted to rely upon a naked assertion of its wide scope in order to in turn argue the government does not have a compelling interest in enforcing the ACA as written.  As applied grandfathering of certain plans may have little if any impact.