On Friday, August 22, 2014, the federal government proposed an alternative accommodation method for religious nonprofits that object to including coverage of some or all contraceptives in their employee or student health plans and, for the first time, an accommodation for closely held businesses whose owners have a religious objection to such coverage. The latter is a response to the US Supreme Court’s Hobby Lobby decision; the former is a response to the US Supreme Court’s ruling that Wheaton College should get relief from the mandate without following the existing accommodation procedure.

Recall: in response to the Affordable Care Act, the federal HHS department issued regulations requiring all employee and student health plans to cover all FDA-approved contraceptive drugs, devices, and procedures (“all” is a loose term: there are many exceptions). In response to religious freedom concerns, the administration developed a three-tier system: churches are exempt from the mandate: they can purchase insurance coverage that excludes some or all of the contraceptives; religious nonprofits can use an “accommodation” procedure: via EBSA Form 700, tell the insurer or third-party administrator (TPA) to exclude some or all contraceptives-thereby putting a legal obligation on the insurer or TPA to offer to the same women employees and students full payment for their use of the same contraceptives; for-profit companies, whatever religious or moral concerns of their owners and managers, are fully subject to the mandate.

The result was a growing list of lawsuits by religious nonprofits and by businesses (for an overview, details, and relevant documents, visit the Becket Fund for Religious Liberty’s HHS Mandate Information Central. The federal government has lost the great majority of these cases, including three times at the Supreme Court.

Now proposed: for the first time, the “accommodation” is extended to some businesses. In its Hobby Lobby decision, the Supreme Court said that closely held companies, at least, cannot be simply excluded from religious-freedom protections because they make money or have a corporate structure. In protecting the ability of such companies to be aligned with particular religious convictions, the Court is protecting the ability of the companies’ owners to be faithful to those convictions. An accommodation like that offered to religious nonprofits could be a way to honor those religious convictions, the Court suggested, without endorsing any particular method.

In response, the government on Friday issued proposed rules, soliciting public comments by October 21, 2014. Comments are sought on two matters:

(1) Definition of a “closely held” business-the kind of business eligible for the accommodation. The government is proposing to modify the existing definition of which kind of organizations are eligible for the accommodation to include, in addition to religious nonprofits, closely held businesses. So how should a closely held business be defined? Comment is asked on two definitions-one based on the number of shareholders or owners, the other keyed to the “fraction of the ownership interest [that] is concentrated in a limited and specified number of owners.”

(2) Adequacy of the existing accommodation. Does the existing accommodation suffice for businesses whose religious concerns are now to be recognized-or will these businesses, just as Wheaton College and other religious nonprofits, regard the EBSA Form 700-process as still implicating them in arranging the coverage they reject as immoral?

A note on individuals and institutions. After describing the two ways of defining closely held businesses, the announcement says: “These approaches might serve to identify for-profit entities controlled and operated by individual owners who likely have associational ties, are personally identified with the entity, and can be regarded as conducting personal business affairs through the entity. These appear to be the types of entities the Court sought to accommodate in Hobby Lobby.”

The government’s goal is to limit the accommodation to companies that can be regarded as extensions of the owners: the companies are to be recognized as able to have a faith-shaped health benefits policy only because this kind of company can be treated as essentially nothing other than the owners writ large.

But the company or corporate structure cannot in fact be dismissed, as the proposed rule must acknowledge. To have a valid claim to the accommodation, the company itself must undertake a “valid corporate action (or similar action by a business that is not organized as a corporation)” as such action is specified in the relevant state’s corporate law. The owners cannot just announce one day a moral objection to the contraceptives mandate and thereby trigger the accommodation; instead, the company must follow whatever its state’s law for business structures specifies as a way for a valid business–not individual–decision.

A question: so if business structure and business law cannot be ignored even with closely held companies-as if such companies are essentially no different than the owners themselves-why should religious freedom protection be limited to closely held companies and not be extended to other business structures? Stay tuned!

Now enacted: a second “accommodation” option. Also on Friday, in response to the Wheaton College Supreme Court ruling, the federal government published interim final rules creating an additional accommodation method. This second method is effective on Wednesday, August 27, when published in the Federal Register, but “interim” because the government is calling for public comment (to be submitted by October 21, 2014) and might modify the method.

Wheaton College and other religious nonprofits have successfully argued in court that the current accommodation method does not in fact respect their religious concerns. As soon as they submit EBSA Form 700 to their insurer or TPA, that entity is legally required to inform the employees and students that the insurer or TPA will pay for any use of the contraceptives or abortifacients that the religious nonprofit said should be excluded!

Interpreting (or over-interpreting) the Supreme Court’s words in its Wheaton College ruling, the government has now created an alternative method. In this alternative, rather than sending EBSA Form 700 to the insurer or TPA, the employer need only “notify HHS in writing of its religious objection to coverage . . . .”

But what happens then? Upon receipt of this objection to coverage, the federal government itself will step in and do what EBSA Form 700 does: contact the insurer or TPA, telling them to contact the employees and students to assure them that the insurer or TPA will pay for any use of the contraceptives or abortifacients that the religious nonprofit said should not be covered!

To ensure that the missing coverage will be offered to those exact employees and students of the objecting religious organization, the notice sent to HHS must:

“include the name of the eligible organization and the basis on which it qualifies for an accommodation; its objection based on sincerely held religious beliefs to providing coverage of some or all contraceptive services (including an identification of the subset of contraceptive services to which coverage the eligible organization objects, if applicable); the plan name and

type (i.e., whether it is a student health insurance plan within the meaning of 45 CFR 147.145(a) or a church plan within the meaning of ERISA section 3(33)); and the name and contact information for any of the plan’s third party administrators and health insurance issuers.”

With this information, the government will contact the insurer or TPA, reminding them of their legal obligation to provide the contraceptives coverage to the employees and students “notwithstanding that the policyholder is an eligible organization with a religious objection to contraceptive coverage.”

The government claims that this alternative method, just as the original method, ensures that an objecting religious organization does “not have to contract, arrange, pay, or refer for” the objected-to coverage. Except that, in both methods, it is exactly the giving by a religious organization of notice about its religious objection that triggers the provision of coverage by the insurer or TPA of exactly the objected-to contraceptives and abortifacients to exactly the employees and students of exactly the religious organization that has the objection.

What should be done: The government can and should revisit its original regulation that created an actual exemption from the mandate for “religious employers”–and expand its definition to include not only churches but religious nonprofits and faith-shaped companies with a religious objection to the mandate. It should devise some means other than employer health plans to ensure no-cost coverage of legal contraceptives services. An alternative means of ensuring access would both actually lift the religious freedom burden from religious nonprofits and for-profits and actually ensure maximum access–which the current employer-based scheme does not because of all of the exceptions (church exemption, grandfathered plans, small businesses not required to offer health insurance, etc.).