May 3, 2019
DFS TAKES ACTION AGAINST HEALTH INSURERS FOR VIOLATIONS OF INSURANCE LAW RELATED TO CONTRACEPTIVE COVERAGE
DFS Investigation Finds That Ten Health Insurers, Including Aetna and Oxford, Improperly Exempted Employers from Providing Contraceptive Coverage
Insurers to Pay $509,000, Issue Claim Restitution and Reimbursements for Insureds Who Should Have Received Contraceptive Coverage
Acting Superintendent Lacewell Also Reminds Insurers that the Federal Government’s Religious Exemption Rules on Contraceptives Do Not Preempt State Law, and All Insurers Must Comply with New York Law and Requirements for Coverage of Contraceptive Services
Acting Financial Services Superintendent Linda A. Lacewell today announced that the Department of Financial Services (DFS) has signed consent orders with ten health insurance companies, including Aetna Life Insurance Co., and Oxford Health Insurance, Inc. and its affiliates, for violations of New York Insurance Law related to requests by employers for exemptions from providing contraceptive coverage to their members. Under the consent orders, the insurers, collectively, will pay a fine of $509,000 and take corrective actions, including reimbursing members who paid for contraceptives. The Acting Superintendent also announced that DFS has issued guidance reminding New York health insurers that final rules issued by the U.S. Departments of Health and Human Services, Labor, and Treasury do not preempt New York Insurance law, which makes coverage for contraceptive items and services widely available by providing a narrow religious employer exemption. The other insurers are: Crystal Run Health Plan LLC, Crystal Run Health Insurance Company Inc., CDPHP Universal Benefits, HealthNow New York, Inc., Independent Health Association, and Independent Health Benefits Corp.
“New York’s health insurers are on notice that DFS will take all actions necessary to protect healthcare consumers from insurers that fail to adhere to New York State’s statutory and regulatory requirements, including for contraceptive coverage,” said Acting Superintendent Lacewell. “Today’s guidance also serves as a strong reminder to New York-regulated insurers that recent federal rules regarding exemptions on the basis of religious beliefs do not preempt robust consumer protections provided by state law.”
A DFS investigation found that the insurers improperly granted religious employer exemption requests to more than 30 entities that did not actually meet the requirements of the Insurance law from January 1, 2016 to December 31, 2017. Oxford granted the most exemptions to entities that were clearly not religious employers. Examples of the entities that Oxford wrongly granted an exemption to include a wood floor refinisher, a café, a chimney cleaning service, a gastroenterologist, a tax consultant, and a construction company.
Under the consent orders announced today, the insurers will take corrective actions, including:
- Contacting all members who should have received written notice of the rider coverage and making restitution with respect to claims regarding coverage for contraceptive drugs and devices from January 1, 2016 through December 31, 2017.
- Reimbursing members who were denied coverage and had to pay out of pocket for contraceptive coverage, including the payment of interest to the member;
- Creating a more robust review process to ensure insurers thoroughly review future religious employer exemption requests to ensure all entities making a request meet the requirements of New York Insurance Law.
The U.S. Departments of Health and Human Services, Labor, and Treasury issued final rules in November 2018, which provide an exemption from the contraceptive coverage mandate in the Affordable Care Act (ACA) to entities and individuals that object to services covered by the mandate on the basis of religious beliefs.
The DFS guidance announced today advises insurers that under New York Insurance Law, they must provide broad coverage for contraceptive items and services, and may only provide an exemption for contraceptive items and services for religious employers as defined in New York Insurance Law.
DFS also notes in today’s guidance that under the narrow religious employer exemption, a religious employer may request an insurer 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. An employer is a “religious employer” if it meets the following criteria:
- The inculcation of religious values is the employer’s purpose;
- The employer primarily employs persons who share the employer’s religious tenets;
- The employer serves primarily persons who share the employer’s religious tenets; and
- The employer is a nonprofit organization as described in the Internal Revenue Code.
An insurer cannot rely on the express self-certification without inquiring and verifying the factual basis.
Additionally, DFS advised insurers that under New York Insurance Law, 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 New York Insurance Law, when a religious employer opts not to include the coverage, the insurer must provide written notice to insureds, upon enrollment, that describes their right to directly purchase the coverage from the insurer as well as the additional premium for the coverage. The insurer must provide the contraceptive coverage by rider to any insured that requests the coverage, and may provide the coverage at no cost.
Copies of the consent orders can be found here.
A copy of the guidance can be found here.