Supplement No. 2 to Insurance Circular Letter No. 1 (2003)
May 1, 2019
All Insurers Authorized to Write Accident and Health Insurance in New York State, Article 43 Corporations, Health Maintenance Organizations, Student Health Plans Certified Pursuant to Insurance Law § 1124, and Municipal Cooperative Health Benefit Plans
Religious Employer Exemption for Contraceptive Services
STATUTORY REFERENCES: N.Y. Insurance Law §§ 3221 and 4303
On January 21, 2017, the Department of Financial Services (“Department”) issued Supplement No. 1 to Insurance Circular Letter No. 1 (2003), setting forth that, notwithstanding federal law, insurers authorized to write accident and health insurance in New York State, article 43 corporations, health maintenance organizations, student health plans certified pursuant to Insurance Law § 1124, and municipal cooperative health benefit plans (collectively, “issuers”) must provide coverage for contraceptive items and services. This circular letter further reminds issuers of the requirements of the New York Insurance Law and regulations promulgated there under regarding health insurance coverage for contraceptive items and services, including the narrow exemption for religious employers.
New York Insurance Law, which makes coverage for contraceptive items and services widely available by having a narrow religious employer exemption, is not preempted by recent final rules1 issued by the U.S. Departments of Health and Human Services, Labor and Treasury. These final rules were effective on January 14, 2019, subject to pending litigation. Issuers must comply with all New York statutory and regulatory requirements for coverage of contraceptive services. This circular letter supplements Insurance Circular Letter No. 1 (2003) and Supplement No. 1 to Insurance Circular Letter No. 1 (2003) issued on January 21, 2017.
The narrow exemption for a religious employer from providing coverage for contraceptive items and services is long-standing in New York law and predates the Affordable Care Act. A religious employer may request an issuer to issue a group or blanket policy or contract without contraceptive coverage where contraceptive items or services are contrary to the employer’s religious tenets, provided that the employer meets all the criteria of being a “religious employer” as defined in Insurance Law § 3221(l)(16)(A)(1) or 4303(cc)(1)(A). An employer is a “religious employer” if: (1) the inculcation of religious values is the employer’s purpose; (2) the employer primarily employs persons who share the employer’s religious tenets; (3) the employer serves primarily persons who share the employer’s religious tenets; and (4) the employer is a nonprofit organization as described in Internal Revenue Code § 6033(a)(3)(A)(i) or (iii).
Pursuant to Insurance Law §§ 3221(l)(16)(A)(2) and 4303(cc)(1)(B), a religious employer opting not to include contraceptive coverage must provide written notice of its decision to prospective insureds prior to enrollment with the plan, listing the contraceptive services the employer refuses to cover for religious reasons. Under Insurance Law §§ 3221(l)(16)(B) and 4303(cc)(2), when a religious employer opts not to include the coverage, the issuer must provide written notice to insureds, upon enrollment, that sets forth their right to directly purchase the coverage from the issuer and the additional premium for the coverage. The issuer must provide the contraceptive coverage by rider to any insured that requests the coverage. The issuer may provide this coverage for contraceptive items and services for the employees of a religious employer automatically at no additional premium charge.
New York’s religious employer exemption, as set forth in the New York Insurance Law, has been upheld by New York’s highest court. In Catholic Charities of Diocese of Albany v. Serio, 7 N.Y.3d 510, 522 (2006), the New York Court of Appeals upheld the narrow religious employer exemption and rejected attempts to broaden the exemption, stating that “[t]he neutral purpose of the challenged portions of the WHWA--to make contraceptive coverage broadly available to New York women--is not altered because the Legislature chose to exempt some religious institutions and not others. To hold that any religious exemption that is not all-inclusive renders a statute non-neutral would be to discourage the enactment of any such exemptions--and thus to restrict, rather than promote, freedom of religion.”
Accordingly, the narrow exemption for a religious employer from providing coverage for contraceptive items and services continues to apply to all group or blanket polices or contracts that are delivered or issued for delivery in New York, regardless of the exemptions implemented in the final Federal rules.2 Employers such as religious schools, religious nursing homes, and religious health care facilities were specifically found not to qualify as “religious employers” in Catholic Charities. In accordance with Catholic Charities, an issuer must ensure that an employer is in fact a religious employer that satisfies all of the criteria within Insurance Law § 3221(l)(16)(A)(1) or 4303(cc)(1)(A) before granting the exemption from providing contraceptive coverage. An issuer that receives a request for exemption may not rely solely on a self-attestation from an employer. An issuer should initially look to the employer’s name and may be able to discern from the name itself that the employer is not a religious employer. In addition, where the issuer is uncertain whether the employer is a “religious employer” as defined in the Insurance Law, the issuer should request proof that the employer is a “religious employer” by requesting relevant documents and representations from the employer including articles of incorporation, bylaws, charters, mission statements, brochures, and nonprofit determination letters.
In New York, issuers must provide broad coverage for contraceptive items and services. Issuers may only provide an exemption for contraceptive items and services for religious employers as defined in Insurance Law §§ 3221(l)(16)(A)(1) or 4303(cc)(1)(A). The Department will monitor compliance, including during market conduct exams, with all contraceptive coverage requirements, including the granting of a religious employer exemption under the New York Insurance Law. The Department will take action against an issuer for any failure to adhere to all statutory and regulatory requirements for contraceptive coverage.
Please direct any questions regarding this circular letter to Colleen Rumsey, Supervising Insurance Attorney, by mail at New York State Department of Financial Services, Health Bureau, One Commerce Plaza, 19th Floor, Albany, New York 12257, or by email at [email protected].
Very truly yours,
Chief, Health Bureau
 Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 FR 57536 (November 15, 2018), and Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 FR 57592 (November 15, 2018), codified at 26 CFR Part 54, 29 CFR Part 2590, and 45 CFR Part 147.
 The final Federal rules only address the applicability of the Federal contraceptive mandate and do not regulate state contraceptive mandates or state religious exemptions. See 83 FR 57573.