“New York's health insurers are on notice that DFS will take all actions necessary to protect healthcare consumers from insurers that fail to adhere to New York State's statutory and regulatory requirements, including for contraceptive coverage,” said Acting Superintendent Lacewell. The new guidance “also serves as a strong reminder to New York-regulated insurers that recent federal rules regarding exemptions on the basis of religious beliefs do not preempt robust consumer protections provided by state law.”

The DFS said that a DFS investigation found that the insurers improperly granted religious employer exemption requests to more than 30 entities that did not actually meet the requirements of the insurance law from January 1, 2016 to December 31, 2017. According to the DFS, Oxford granted the most exemptions to entities that were clearly not religious employers. Examples of the entities that Oxford wrongly granted an exemption to include a wood floor refinisher, a café, a chimney cleaning service, a gastroenterologist, a tax consultant, and a construction company, according to the DFS.

Under the consent orders, the insurers will take corrective actions, including:

• Contacting all members who should have received written notice of coverage and making restitution with respect to claims regarding coverage for contraceptive drugs and devices from January 1, 2016 through December 31, 2017;
• Reimbursing members who were denied coverage and had to pay out of pocket for contraceptive coverage, including the payment of interest; and
• Creating a more robust review process to ensure insurers thoroughly review future religious employer exemption requests to ensure all entities making a request meet the requirements of New York insurance law.

The new DFS guidance advises insurers that under New York's insurance law, they must provide broad coverage for contraceptive items and services, and only may provide an exemption for contraceptive items and services for religious employers as defined in New York's insurance law.

The DFS also noted in the new guidance that under what it characterized as the “narrow religious employer exemption,” a religious employer may request an insurer to issue a group or blanket policy or contract without contraceptive coverage where contraceptive items or services are contrary to the employer's religious tenets, provided that the employer meets all the criteria of being a “religious employer” as defined in Insurance Law. An employer is a “religious employer” if it meets the following criteria:

• The inculcation of religious values is the employer's purpose;
• The employer primarily employs persons who share the employer's religious tenets;
• The employer serves primarily persons who share the employer's religious tenets; and
• The employer is a nonprofit organization as described in the Internal Revenue Code.

An insurer cannot rely on an express self-certification without inquiring and verifying the factual basis.

Additionally, the DFS advised insurers that under New York's insurance law, a religious employer opting not to include contraceptive coverage must provide written notice of its decision to prospective insureds prior to enrollment with the plan, listing the contraceptive services the employer refuses to cover for religious reasons.

Under New York's insurance law, when a religious employer opts not to include the coverage, the insurer must provide written notice to insureds, upon enrollment, that describes their right to directly purchase the coverage from the insurer as well as the additional premium for the coverage. The insurer must provide the contraceptive coverage by rider to any insured that requests the coverage, and may provide the coverage at no cost.

Learn more: Consent Orders; Guidance.