Given the headline news over the past few months surrounding Hobby Lobby, Wheaton College and the issue of providing contraception coverage, brokers may be wondering how their self-funded clients fit into the puzzle. While there is no simple answer and clarification could still be far away, an explanation of how these recent events currently affect self-insured employers and third-party administrators might shed some light on the situation.
When the Department of Health and Human Services issued regulations allowing certain religious nonprofits to opt out of providing contraception coverage, it provided that these entities could instruct their insurance companies, or TPAs for self-funded employers, to provide and pay for the coverage directly. The Supreme Court expanded this universe in July, when it ruled that closely held for-profit businesses could also cite religious objections to avoid providing contraception coverage. The problem, however, is that TPAs are not insurance companies, and they also arent getting reimbursed, especially as the number of organizations objecting to contraception coverage on religious grounds continues to grow.
Thus far, insurers have not reimbursed one TPA. However, even if reimbursed, there is no guarantee that the amount of any savings an insurer might receive would be enough to cover what a TPA pays out of its own funds. The result? TPAs continue to use more of their own funds to pay for these services, without any confidence they will ever be reimbursed.
The black hole TPAs have found themselves in promises to become wider, as new proposed rules issued in August expanded the definition of an eligible organization to include closely held-for profit corporations, such as Hobby Lobby. This undoubtedly will take a bigger bite out of TPAs, which will have to pay for more contraceptive services as the number of objectors grows.
While TPAs continue to pay, HHS is taking comments about how to clearly define a closely held, for-profit company and how these companies would establish their religious objections. Until a point is reached where everything is clearly defined, the confusion surrounding self-funded employers and TPAs will continue. For now, its important to stay educated on the most recent proceedings and prepare yourself for even more change.
Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services. He can be reached email@example.com.
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