The IAA One Minute Blog

On Monday, June 30, 2014, the Supreme Court of the United States ruled that requiring family owned corporations to pay for contraceptive coverage under the Affordable Care Act (ACA) violated a federal law protecting religious freedom.  

 The Ruling

The contraceptive coverage requirement which was created under the ACA was challenged by two corporations whose owners say they run their businesses on Christian principles. The businesses are: Hobby Lobby, a chain of craft stores and Conestoga Wood Specialties, which makes wood cabinets.

The companies objected to covering certain forms of birth control, specifically drugs or procedures that aid in a termination of an unwanted pregnancy, such as intrauterine devices and Plan B, as to them it goes against their religious morals. The companies said they had no objection to some forms of contraception such as condoms, diaphragms, sponges, several types of birth control pills, and sterilization surgery.

The ruling was 5-4, with the court stating that the federal religious freedom law applied to "closely held" for-profit corporations run on religious principles. Closely held for-profit businesses are those with at least 50% of stock held by five or fewer people, such as family owned businesses.

According to the justices who voted in favor of Hobby Lobby, the ruling does not mean that employers can now say that they have religious objections to vaccines, blood transfusions or even paying taxes. The dissenting justices say this may not be the case. They are concerned that this ruling has opened the door to many challenges from corporations over laws that they claim violate their religious liberty. Many worry giving corporations religious freedom rights could affect laws on employment, safety and civil rights. 

What the Future Holds

This decision has set off a frenzied partisan debate over religious and reproductive rights that will continue through the November congressional elections and beyond. The ruling does not prevent affected individuals from purchasing the contraceptives at issue; it only gives the employer the ability to exclude the items from their employer sponsored insurance or self-insured plan.

The practical result of this ruling will likely be an administrative fix by the Obama administration that subsidizes the contraceptives at issue. A White House spokesman said the administration will work with Congress to ensure women affected by the ruling will continue to have contraceptive coverage.

It is important to note, even before the mandate under the ACA kicked in, nearly 90% of U.S. employers large and small, covered contraception. Only 12% had some type of limit on contraceptive coverage, according to a 2011 survey.

What IAA has to Say

The ACA has brought many changes and it is clear that things will continue to change as employers find these mandates do not work for their businesses. Insurance Administrator of America is here to help guide you on any changes that might occur due to the ACA. Remember, with IAA one call does it all.

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