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After Hobby Lobby, HHS' New Contraceptive Rules Up for Public Comment

By Mark Wilson, Esq. | Last updated on

Even though the Affordable Care Act's contraception mandate took a blow in Hobby Lobby, the Obama administration is still out there trying to preserve it -- and head off any future problems.

On Friday, the Department of Health and Human Services issued new proposed rules about the procedures religious employers can use to get exempted from providing contraceptive coverage in their employer-sponsored health plans.

For Nonprofits

Heading up to the Supreme Court are several challenges brought by nonprofit organizations to the ACA's religious exemption. The ACA allows a religious nonprofit employer, like the University of Notre Dame or the Little Sisters of the Poor, to sign a form indicating that it objects to providing contraceptive coverage. This still allows the employee to obtain contraceptives, but the employer doesn't have to pay for it.

Both Notre Dame and Little Sisters objected to even this accommodation; they argue that the act of signing a form still gives them some sort of hand in a woman obtaining contraceptives. (In ruling against Notre Dame, however, Judge Richard Posner said Notre Dame got the legal mechanism wrong. The contraceptive coverage isn't triggered by the denial of coverage by the employer; it would happen whether or not they signed the objection form.)

HHS' new regulations provide that an employer just has to notify HHS in writing of its objection, and HHS will take care of the logistics of insuring the employee for contraceptive coverage. (Though given Little Sister's obstinacy to women in its employ having any access to contraception, this is unlikely to placate them.)

For Closely Held For-Profit Companies

Yes, we're talking about Hobby Lobby. Under the proposed regulations, closely held corporations that object to providing contraception would be treated like nonprofits in that they would only have to make their objection in writing. HHS would handle the logistics of providing contraception. Treating companies like Hobby Lobby like religious nonprofits for ACA purposes is exactly what the Supreme Court floated as a possible "less restrictive means" of achieving the same goal.

That's the easy part. Here's the hard part: One of the questions the regulations seek to answer is, "What is a closely held for-profit corporation?" Proposed regulation 2014-20254 suggests two options: (1) "Where none of the ownership interests in the entity is publicly traded and where the entity has fewer than a specified number of shareholders or owners"; or (2) "A for-profit entity in which the ownership interests are not publicly traded, and in which a specified fraction of the ownership interest is concentrated in a limited and specified number of owners." Different government agencies (and parts of the tax code) use these different definitions for a closely held corporation.

The proposed regulations will be open for public comment at until October 21.

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