Supreme Court Rules Closely Held Businesses Shielded from Contraception Mandate

July 3, 2014 News Alerts

The U.S. Supreme Court on Monday created a new exemption to the Affordable Care Act (ACA) provision that requires for-profit companies to offer birth control health insurance coverage to their employees. In a 5-4 vote, the justices ruled that the Religious Freedom Restoration Act (RFRA) applies to closely held companies and shields them from having to provide contraception coverage to their employees.  In the Court’s majority opinion, a closely held corporation is loosely defined as “being owned and controlled by members of a single family.”

Under the ACA and related U.S. Department of Health and Human Services regulations, many health plans must cover certain preventive services for women without cost sharing in the form of coinsurance, copayments and deductibles. These preventive services include “all Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.” The “contraception mandate,” as it became known, requires companies with 50 or more full-time employees to provide female participants covered by a company health plan with specified contraceptive coverage at no cost, or face financial penalties.

The contraceptive mandate has been the subject of lawsuits across the country since the ACA became law. In the Hobby Lobby case decided earlier this week, the Supreme Court combined two cases challenging the mandate—Burwell v. Hobby Lobby Stores, Inc.and Conestoga Wood Specialties Corp. v. Burwell. In both cases, the owners of private, family-owned for-profit corporations argued that it would violate their religious beliefs to facilitate access to certain contraceptive drugs or devices.

The court made clear that its decision in Hobby Lobby is limited to the contraceptive mandate. It stated that the decision does not hold that all mandates must necessarily fall if they conflict with an employer’s religious beliefs. (The Court gave the example of mandates regarding vaccinations and blood transfusions.) It also stressed that the ruling does not allow employers to ignore other laws that prohibit employment discrimination based on religion under the guise of an employer’s own religious freedom acknowledged in the Hobby Lobby decision.