All Employers and Employees


June 30, 2014


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In a landmark ruling on June 30, 2014, the Supreme Court ruled in Burwell v. Hobby Lobby that for-profit employers with religious objections may opt out of providing contraceptive coverage to employees under the Affordable Care Act for religious reasons. Under this decision, employers with religious objections may exempt themselves from providing all Food and Drug Administration- approved forms of birth control in their health plans.

The majority decision declared the 2010 Affordable Care Act violated a 1993 law guaranteeing religious freedom, the Religious Freedom Restoration Act. Using Congress’ definition of corporations as “people,” justices used this standard to allow only “closely-held” corporations to opt out of the requirement. Noting an exception for non-profits, the majority opinion questions why for-profit corporations couldn’t similarly opt out and receive either outside insurance company sponsorship or federal government sponsorship of health care.

In practice, this decision is expected to have a large impact on for-profit businesses. With no defined standard included in the majority opinion, business owners will likely look to entities such as the IRS. The IRS defines “closely-held” as a business in which 50 percent of outstanding stock is held by five or fewer individuals. These businesses will have the option of reviewing their health care coverage under the Affordable Care Act for consistency with their own religious beliefs. This may affect the way in which businesses are able to hire and retain employees as a part of their overall benefits package.


Action Items:

  1. Review employer health coverage options.
  2. For assistance with health coverage options under the Affordable Care Act, contact Client Care at (866) 716-6294.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

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