Friday, December 20, 2013

The First Amendment, Catholic Organizations, Same Sex Marriage, and Women's Health

Two recent news stories that could affect Catholic organizations and their freedom to ensure the practice of and adherence to Catholic teaching are causing a buzz on the internet and within the walls of many Catholic organizations.

First is news from Pennsylvania that a state legislator has introduced a bill that would prohibit employers from requiring employees to abide by religious doctrine as a condition of employment. This legislative bill was filed after a non-diocesan Catholic school fired one of its teacher employees who lives in New Jersey. Through a change in that state's law, the employee automatically entered into a civil "marriage" with his same-sex partner. The law changed earlier this year when a court in New Jersey mandated the redefinition of civil marriage to recognize same-sex couples. This meant that the civil union that the school employee and his same-sex partner had entered into in 2008 became recognized as a "marriage" under New Jersey law.

When the school learned of this turn of events, the principal said he had no choice but to fire the teacher because his employment contract said he must abide by Catholic doctrine. The employee asserts that his sexuality was known, that he has been with his partner for many years and that they have frequented school events together. In his mind their marriage did not change anything. The pending legislation is an attempt to prevent religious employers from requiring employees to abide by religious doctrine that is deemed to conflict with civil rights of individuals. In themean time, it is viewed as oppressive and violative of religious freedom by many, both inside and outside of Pennsylvania  and New Jersey.

The second story is from the LA Times and is entitled, "Are Catholic hospitals bad for women's health? ACLU says yes." This article mentions an ACLU report that notes the growth in the number of Catholic hospitals in the ten years from 2001 to 2011. See chart below.

Number and percentage of total acute-care hospitals by hospital type, 2001 and 2011
Original posted on ACLUwebsite

The LA Times article insists that the health of women is endangered when they go to Catholic hospitals because doctors and other staff are hampered by having to abide by Catholic doctrine rather than being concerned about the patient and her health. The article follows on the heels of a lawsuit that was filed recently by the ACLU on behalf of Tamesha Means against the USCCB. The complaint essentially alleges that the Bishops' Conference owes Means compensation because their Church laws prevented Means from getting proper care at a Catholic hospital when she sought care there during atroubled pregnancy. According to the LA Times article:
Everyone knows that Catholic hospitals don’t perform elective abortions.  
Incomprehensibly, Catholic hospitals even fall afoul of the church if they perform an abortion to save a mother’s life. 
But are they negligent if they fail to merely inform a pregnant woman that abortion is the safest option when her health is in danger and her fetus faces certain death? And that if she wants an abortion, she should seek help elsewhere? 
That’s the crux of the issue in a negligence lawsuit filed by the ACLU on behalf of Tamesha Means, a Michigan woman whose local hospital treated her with Tylenol and sent her home twice after her water broke 18 weeks into her pregnancy. The suit alleges that the hospital, the only one within 30 miles of Means' home, did not tell her that her fetus was doomed, nor that inducing labor and terminating the pregnancy was the only way to reduce the risk of a dangerous infection. 
But there is a twist in this case. 
Instead of filing suit against Mercy Health Partners, the Muskegon, Mich., hospital where the incident took place, the ACLU took the unusual step of suing the U.S. Conference of Catholic Bishops, which sets the rules for Catholic hospitals on many aspects of care, including abortion.
Many will recall the controversial news story from Arizona in 2010 when a sister at a Catholic hospital was told by the bishop that she was automatically excommunicated due to her role in deciding that an abortion was necessary for a patient at the hospital. A few months later, the bishop stripped the hospital of its Catholic identity for its defense of the decisions made and the procedures used on the patient. The actions of the bishop remain a controversial topic in many Church circles.

Whether the actions of the Arizona bishop and the hospital staff in Michigan were right or wrong, these events and other high profile Catholic hospital cases will undoubtedly be a part of the big picture that the ACLU attempts to paint of Catholic doctrine and social teaching when and if its case against the USCCB moves forward. Indeed, whether the principal of the Catholic school in Pennsylvania acted appropriately and legally may depend on the party with whom you sympathize.

The question now becomes: Are the First Amendment and women's healthcare services on an unavoidable collision course? And what of the First Amendment versus the rights of gay people? If a collision is inevitable in these cases, will there be any survivors?

Obama Administration Announces Another ACA Waiver for Some Individuals

Late last night or early this morning, depending on where you live, the Obama Administration announced another change to implementation of the Affordable Care Act for some individuals. This time the Centers for Medicare and Medicaid Services announced that individuals whose policies will be cancelled as of January 1 (because they would not be compliant with the ACA) will be able to seek a hardship exemption. Such an exemption will allow them to purchase catastrophic plans that are normally available only to individuals under age 30. Here is the announcement letter that CMS issued.

 
 
This latest change in enforcement or implementation comes on the heels of a number of other recent pronouncements by the Administration. After insurers began announcing that they would have to cancel millions of policies for noncompliance with the required coverage for what are called "essential health benefits" in the ACA, millions of people were left with the prospect of being uninsured. These cancellations ignited a firestorm and launched a public relations nightmare for the Obama Administration in light of the Presidents repeated insistence over the last five years that "if you like your health insurance you can keep it." The cancellations proved that assertion to be patently false.
 
In an attempt to fix the problem that the cancellations created, President Obama announced in mid November that insurance companies would be allowed to renew for one more year coverage that did not meet ACA standards. The problem with that attempt at a resolution was that it falls to the states running their own health care marketplace websites to make the actual determination as to which plans can stay in force or not. And two states with the largest populations--New York and California--were among the 22 states that have said that they will not allow plans to be renewed if they do not mee the requirments of the ACA.
 
The Administration also extended the deadline by which individuals have to enroll in order to be eligible for coverage on January 1, 2014, from the original date of December 15 to December 23, 2013. This one-week extension was meant to compensate for the delay caused by the error-plagued rollout of the healthcare.gov website on October 1. In addition, the Administration recently asked insurers to extend the date by which individuals can make their first payment to January 10, 2014, while making the coverage retroactive to January 1. This pronouncement two days ago got little notice in the media since it came in the middle of a week of last-minute Christmas shopping. The 10-day extension is likely to affect only a handful of people who take advantage of it while confusing others who think it means they can wait until January 10 to enroll.
 
So, this latest pronouncement of a hardship exemption for cancellees seems to be yet another attempt to convince individuals whose policies have been cancelled to enroll in the marketplace. However, it could create even more logistical nighmares across the board -- for those who run the exchanges, for insurers who have fewer people paying for coverage, for consumers who do not understand their options, and for those with serious health problems who get a hardship waiver. What these purchasers of catastrophic plans are likely to discover is that these plans cover very little when they go for medical treatment, and they require high up-front costs before coverage kicks in for essential health benefits.
 
If you are interested in catastrophic coverage and want to see a list of catastrophic plans available in your area, go to https://www.healthcare.gov/catastrophic-plan-information/.



Thursday, December 19, 2013

Are Employer-Provided Life Insurance Premiums a Taxable Fringe Benefit?

Does your religious institute or a sponsored ministry pay premiums for life insurance for its employees, in whole or in part? Did you know that the portion that the employer pays is a fringe benefit to the employee and may be taxable under the Internal Revenue Code? IRS Publication 15-B (pp. 11-14) discusses fringe benefits and requirements of -- and exceptions to -- taxation. (See excerpt from Pub 15b below.)


If you discover that you and your employees should be paying taxes on this fringe benefit, consult with your payroll department and ask them to help assess the situation. The higher an employee's income and age, the higher the tax liability is likely to be. You may also want to notify your employees that this perk is a fringe benefit and that taxes may have to be withheld.

If there is a tax liability, Medicare and Social Security taxes are required to be withheld, while income tax withholding is optional. Pub 15b explains this nuance. Notification of this taxable fringe benefit and its inclusion in income should be sent to employees before the issuance of 2013 W-2s in January of 2014.

Tuesday, December 17, 2013

Addendum to earlier post on the EBSA Form 700

Earlier today we posted on the EBSA Form 700 requirement for non-profit employers seeking an accommodation from the contraception mandate. Note that employers must also be aware of state laws that could affect the coverage options that are available to them. Some states do not allow fully insured plans to not cover contraception, and others require you to file a form with the state in addition to the federal form. Below is a snapshot from the website where we found this information, and the link is below the picture so you can read more.
See UnitedHealthcare article from December 4, 2012, "Nonprofits Need to Self-Certify for ACA Contraceptive Exemption" at http://broker.uhc.com/articleView-12786.

The Cadillac Tax and Its Impending Arrival

Should religious institutes be concerned already with the health insurance "Cadillac tax" that is set to take effect in 2018? The topic has been the subject of a few articles in recent months. This article from The Morning Call in Allentown, Pennsylvania, summarizes the dilemma that some employers see before them -- years before the Cadillac tax actually kicks in.

The sum of $10,200 is not a lot when you consider that the tax kicks in four years down the road, and insurance premiums will presumably and (arguably) necessarily rise between now and then. It is easy to conceive of that sum catching many employers off-guard if they do not do some analysis now. Religious institutes would be wise to take at look at the cost of the insurance they currently provide their employees (AND their members) and do some number crunching to see if the Cadillac tax could be arriving in your places of employment in four or five years...

EBSA Form 700 and the Contraceptive Mandate

Many religious institutes are reporting that they have received a notice from their insurance companies or their third party administrators asking them to indicate a choice or sign a form immediately with regard to their health care coverage. The form most often being asked about is the EBSA Form 700. Note that not every organization that claims to be religious needs to sign that form.

This request from insurers is coming now because insurance providers need to know whether they are on the hook under the Affordable Care Act (ACA) for providing contraceptives, sterilization, and abortion-inducing drugs for employees of your organization. As you hopefully know, the ACA requires all insurance coverage to provide "essential health benefits," which includes "women's preventive care." This is where the objectionable coverage for contraceptives, sterilization, and abortion-inducing drugs comes into play, which is the subject of dozens of lawsuits across the United States. We at RCRI have held two webinars on the subject this year to inform our members of what is happening with the "contraceptive mandate," as it has come to be known.

Back to the form that you may be asked to sign by your insurance company. There are two main ways that you may be exempt from having to provide these women's preventive services. First is if your plan is grandfathered. You should know if this applies to your employee plan already, and your insurance company should know, so I won't go into any detail on grandfathered plans here.

The second way to be exempt is if you qualify as a either a "religious employer" or as an "eligible organization." (Some would say this is two ways because they have different results.) The final regulations on the contraceptive mandate define a "religious employer" as "an employer that is organized and operates as a nonprofit entity and is referred to in section 6033(a)(3)(A)(i) or (iii) of the Code." Section 6033(a)(3)(A)(i) and (iii) of the Code refers to churches, their integrated auxiliaries, and conventions or associations of churches, as well as to the exclusively religious activities of any religious order. The italicized  phrases are the ones that are most likely to apply to religious orders and some of their sponsored ministries.

The religious institute itself most likely will qualify as a "religious employer." However, any of its ministries beyond those activities that are "exclusively religious" must be examined to see if they qualify as "integrated auxiliaries" of a church (in this case, the Catholic Church). A full explanation of what an integrated auxiliary is is beyond the scope of this blog post, but religious institutes should familiarize themselves with the criteria. (It is a similar analysis to the one conducted to determine whether a ministry is required to file a Form 990, and often hinges on whether the organization is "internally supported.") [Note: Donna Miller can provide more on this topic and how to conduct an analysis if you request it from her at dmiller@trcri.org.]

If your organization does not qualify as a "religious employer" and is not exempt outright from having to provide the contraceptive coverage, you may be an "eligible organization"-- that is, qualified for an "accommodation." This means that you do not have to pay premiums for the employees to be covered for contraception, sterilization and abortion-inducing drugs, but your insurance provider or third-party administrator DOES have to cover these items for your employees.

Although intended to be a solution to the outcry that the original definition religious employer was too narrow, this provision remains controversial for many employers who have religious objections. You can read a letter entitled "Unacceptable" dated February 10, 2012, signed by dozens of Catholic university personnel and multi-denominational theologians at this link. This letter summarizes the continuing objection that these individuals and organizations have over the amended contraceptive mandate final rules. A statement of similar content was also made by the USCCB this past summer, and that statement can be found here. On the other hand, despite its initial objection to the narrow definition of "religious employer" contained in the proposed rules, Catholic Health Association announced that it could "live with" the accommodation provision in the amended rules and would not challenge the mandate any further. Its statement can be found at the end of this NCR article.

So what is an "eligible organization"?
[A]n eligible organization is an organization that: (1) opposes providing coverage for some or all of the contraceptive services required to be covered [...] on account of religious objections; (2) is organized and operates as a nonprofit entity; (3) holds itself out as a religious organization; and (4) self-certifies that it satisfies the first three criteria (as discussed in more detail later in this section). (https://www.federalregister.gov/articles/2013/07/02/2013-15866/coverage-of-certain-preventive-services-under-the-affordable-care-act#h-13)
So, in order to be an eligible organization, your organization must oppose the coverage requirements due to religious objections, be a nonprofit, hold yourself out as a religious organization, and sign certification to that effect. Notice that this is the only one of the two provisions (religious employer and eligible organization) that requires a certification to be signed. However, it is quite understandable that insurers and third-party administrators would request that religious employers also sign a form indicating their status so that they can justify not providing coverage for the objectionable women's services.

In Summary, the EBSA Form 700 is to be signed by organizations that qualify as an "eligible organization" (eligible for an accommodation). Religious employers should not sign the same form because it indicates that an accommodation should be made for the employees, and no such accommodation is required under the contraceptive mandate. An adapted Form 700 can be drafted using language that expresses that a complete exemption from the contraceptive mandate, rather than an accommodation, is being claimed.