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Definition of 'Closely Held Corporation' Should Be Narrow for Contraceptive Coverage Purposes, Groups Say

Definition of 'Closely Held Corporation' Should Be Narrow for Contraceptive Coverage Purposes, Groups Say

October 23, 2014 — More than three dozen advocacy groups that support the Affordable Care Act's (PL 111-148) contraceptive coverage requirements have submitted comments urging federal regulators to narrowly define which private businesses can object to providing the coverage and claim the accommodation currently in place for certain not-for-profit organizations, following the Supreme Court's Hobby Lobby ruling, the Washington Post's "Wonkblog" reports.

The Obama administration will review these comments and others before issuing a final policy (Millman, "Wonkblog," Washington Post, 10/22).

Background

In Burwell v. Hobby Lobby, the Supreme Court ruled that closely held corporations cannot be required to provide contraceptive coverage to their employees if the corporations' owners have religious objections to contraception. However, the high court did not explicitly define the term "closely held corporation."

As a result, federal regulators requested comments on proposed rules for how to define the term for the purposes of determining which private companies can refuse to provide contraception coverage in their employer-sponsored health plans. Under the proposed rules, employees would receive coverage directly from the insurance company (Women's Health Policy Report, 9/3).

While there is no universal definition of the term, the Internal Revenue Service defines closely held corporations as those that have more than 50% of their outstanding stock value owned by no more than five individuals at any point in the last half of the tax year and that are not personal service corporations, "Wonkblog" reports. Closely held corporations employ an estimated 52% of the U.S. workforce, according to a 2009 study.

Groups' Comments

In a letter addressed to CMS Administrator Marilyn Tavenner, groups that support contraceptive coverage -- including Planned Parenthood Federation of America and NARAL Pro-Choice America -- said for-profit companies should only be able to seek the accommodation under narrow circumstances.

Specifically, they said that the 1993 Religious Freedom Restoration Act (PL 103-141) only permits corporations to claim an accommodation when its business practices "reflect and promote the owners' religious beliefs." To claim an accommodation, a company's owners must have unanimously agreed to operate the business under a set of shared religious principles, the letter argued.

Contraceptive Coverage Opponents Weigh In

Meanwhile, Alliance Defending Freedom -- which represented another business, Conestoga Wood Specialties, in the Hobby Lobby case -- in a formal comment said the exemption should be broader.

The group argued that the Supreme Court's decision prevents the administration from implementing additional limits on the definition of closely held corporation ("Wonkblog," Washington Post, 10/22).