The Affordable Care Act (ACA) mandates that all non-grandfathered medical plans must cover a federally defined list of preventive care services and drugs in-network without cost-sharing. A particularly contentious part of that mandate is the requirement to cover women’s sterilization and contraceptives.
After many lawsuits made their way to the Supreme Court of the United States (SCOTUS), rules were issued in 2017 to provide that most employers with a sincerely held religious or moral objection can be exempt from the contraceptives to which they object. Those 2017 rules were originally challenged but upheld by SCOTUS in July 2020.
Five years later, on August 13, 2025, a trial court ruled in Pennsylvania v. Trump that the 2017 rules were arbitrary and capricious and did not follow reasoned decision-making. This ruling is expected to be appealed to the Third Circuit. In the meantime, the expanded exemptions from contraceptive mandates under the 2017 religious and moral objection rules can no longer be relied upon. So, objecting employers, without an explicit exemption, should work with counsel to determine how to proceed.
Applies To: Employers sponsoring a non-grandfathered medical plan who object to covering one or more of the women’s sterilization or contraceptive coverage benefits.
Go Deeper:
On July 8, 2020, SCOTUS ruled 7-2 that the 2017 expanded exemptions from the contraceptive mandate were issued under proper statutory authority, were correct to address the Religious Freedom Restoration Act (RFRA), and had followed the procedural requirements of the Administrative Procedures Act (APA).
The Biden administration had proposed to amend the 2017 rules to create “individual contraceptive arrangements” and to undo the moral exemption. However, after reviewing 44,000 public comments and with the election of President Trump, they withdrew that proposal and left the 2017 rules intact.
Since revisions to the 2017 rules were withdrawn, the trial court has now determined that the 2017 religious and moral exemption rules did not adhere to the APA’s requirement to follow “reasoned decision-making.” The court contends that the 2017 rules were arbitrary and capricious and must be stricken in their entirety because:
- The religious exemption rule did not reasonably address the problem it purports to resolve and did not provide a satisfactory explanation for why the exemption was opened to essentially any employer, including publicly traded companies.
- The moral exemption rule considered improper factors not authorized by Congress; and
- A reasoned explanation was not provided for why it was so necessary to reverse the narrow exemptions in previous rulemaking and to expand exemptions so broadly. The rules must reasonably consider other alternative pathways that still protect contraceptive and sterilization access for women.
With the 2017 religious and moral exemption rules now vacated, objecting employers who only qualify for exemption because of the 2017 rules will either need to comply with an “accommodation” process (which is only available to some employers, not broadly for all employers), or must work with their legal counsel to explore their legal options (i.e., as Little Sisters of the Poor will do now with respect to their own health plan since they object to participating in the accommodation process).
Practical Impact to Employers:
It is expected that litigation will continue on this issue, potentially again going as far as the SCOTUS. For employers with non-grandfathered medical plans who object to one or more of the women’s contraceptive or sterilization coverage mandates, outright exemption is extremely limited, and for the two other narrow categories of employers, there is an accommodation process that must be followed. Otherwise, the plan must cover each mandated service and drug.
Outright Exemption:
In final regulations issued July 2013, nonprofit entities described in Internal Revenue Code sections §6033(a)(3)(A)(i) or (iii) were allowed to be exempt from contraceptive mandates to which they object. This includes “churches, their integrated auxiliaries and conventions or associations of churches,” and “the exclusively religious activities of any religious order”.
Certain Other Employers with Religious Objection Can Participate in an Accommodation Process:
The 2013 rules provided that other nonprofit entities that hold themselves as religious organizations may navigate a special accommodation process to object to one or more contraceptives. In 2015, this was expanded to include certain closely held for-profit entities with a sincerely held religious objection. These religious non-profits, or closely held for-profit employers, must comply with an accommodation process in one of two ways:
1. Self-certify to the insurer or third-party administrator (TPA) that they are an eligible organization and list the contraceptives that they have a sincere religious objection to covering.
- EBSA Form 700 is available for self-certification.
- This makes the insurer or TPA directly liable under the regulations to take sole responsibility for creating a plan that covers these contraceptives at no cost to covered women or the employer, and to provide annual notification to plan participants on the availability of that coverage.
2. Self-certify their qualification and objection to the Department of Labor (DOL) or Department of Health and Human Services (HHS) via an alternative model notice.
- DOL or HHS will then notify the insurer or TPA to create the additional coverage plan and provide the required annual notification to participants.
However, two courts have granted a permanent injunction barring enforcement of the accommodation requirement from the plaintiffs in these two cases:
- The six employers in Assn. of Christian Schools International v Azar
- Members of the Christian Employers Alliance
Other Employers:
With the 2017 expanded exemptions vacated at this time, objecting employers with a non-grandfathered plan cannot exclude women’s contraceptive or sterilization coverage to which they object unless they follow the exemption or accommodation provisions discussed above.