The Magazine

This Won’t Turn Out Well

The IRS prepares to enforce Obamacare’s contraception mandate.

Jun 17, 2013, Vol. 18, No. 38 • By ASHLEY E. MCGUIRE
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On August 1, the one-year “safe harbor” for religious charities objecting to provisions of Obamacare will end. Starting then, these nonprofit employers will be forced to violate their religious beliefs or pay large fines. In charge of collecting the fines will be our recently newsworthy friends at the Internal Revenue Service.

Crushed

Gary Locke

To recap how we got here: In 2010 a panel created by the new health care law determined that all health insurance policies provided by employers must cover contraception, sterilization, and abortion drugs free of charge. Employers not complying with this Health and Human Services (HHS) mandate will be fined up to $100 per employee, per day. For some, that could mount to millions of dollars a year.

The administration and its supporters promoted the mandate as necessary for women’s health. They trotted out activist Sandra Fluke, who argued that women are withering under the pressure of having to pay for their own birth control. Never mind the fact that contraception can cost an insured woman as little as $9 a month, and many without insurance have access to the same products through publicly funded programs like Title X. To question the necessity of the new requirement, its supporters said, was to make war on women. 

Some have tried to create the impression that a compromise was brokered to accommodate the objectors’ conscience concerns. But this is not so. 

The original mandate included only a narrow religious exemption, for churches and other houses of worship, their “integrated auxiliaries,” and religious orders. This outraged many, including even some liberal Catholics. It is no small thing, after all, for plaintiffs of various faiths who believe that life begins at conception to be forced into complicity with murder when they provide their employees a drug whose own label warns it can destroy a fertilized egg. Nevertheless, the final rule was published on February 15, 2012, and went into effect for private companies on August 1, 2012. 

Over 30 private businesses sued, and the Department of Justice has been flying its attorneys around the country to argue in court that business owners should check their religious beliefs at the door. So far, some 20 plaintiffs have been granted preliminary injunctions, meaning they don’t have to comply with the mandate while waiting for the courts to rule on the merits of their cases. All eyes are on the Hobby Lobby case, just argued by the Becket Fund for Religious Liberty before the Tenth U.S. Circuit Court of Appeals. The financial stakes in this case are high, as the owners face potential fines of $1.3 million a day for noncompliance with the mandate.

Faced with the public outcry, the government did allow nonexempt religious organizations​—​hospitals, universities, charities, and so on​—​a year to get over their scruples and figure out how to comply. That year ends on August 1, when another 30 or so lawsuits filed by objecting nonprofits will be activated. But now, enter stage left: the IRS.

The way the regulation is written, it is the IRS that determines whether an organization qualifies for full exemption from the HHS mandate. To qualify, an organization must be a nonprofit as described in section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii) (oh, my!) of the amended Internal Revenue Code of 1986 and therefore exempt from filing Form 990, which most nonprofits must file annually.  

Religious entities that do not qualify for the 990 exemption may seek alleged relief from the mandate by certifying to their insurance company that they cannot provide the objectionable services and products. The insurance company is then required to issue to each covered employee a separate policy covering contraception, sterilization, and abortifacients free of charge. So the employer is still in the position of facilitating the flow of objectionable services to his employees. 

What’s more, these employers must maintain their “self-certification” in their records for each plan year and make it available for examination upon request by “regulators, issuers, third party administrators, and plan participants and beneficiaries.” The IRS may investigate and challenge any self-certification. 

So the very enforcers at the IRS whose own inspector general admits they systematically targeted conservative and religious groups will now get to decide who is entitled to ladle soup into a bowl for a homeless person without violating his or her conscience. 

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