Smart Benefits: Free Contraception for Women Starts August 1

Starting August 1, 2012, women will have access to free contraception thanks to the Patient Protection and Affordability Act (PPACA). But there are some exceptions to the rule. 

The law requires that FDA-approved female contraceptive methods be covered at 100%, with no copays or deductibles. But timelines for coverage will vary by employer and insurance coverage type.

Fully Insured vs. Self Funded

For employees who have fully insured, non-grandfathered coverage through their employers, the change to contraception coverage will start August 1, 2012, regardless of the employer’s renewal date.  

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Employers with fully insured, grandfathered plans can choose whether to follow this law. 

For employers who self-fund coverage, the benefit will start at the employer’s renewal date.  For example, since most self-funded employers renew in January, the change would go into effect January 1, 2013. 

For all employers – fully insured or self-funded – offering coverage for the first time (i.e. a new employer), the benefit change will go into effect on the plan start date.

Pharmacy Exceptions

According to the law, insurance carriers are allowed discretion in managing the pharmacy benefit. For example, carriers categorize pharmacy benefits by tiers (often tiers 1, 2 and 3), with tier one medications including lower cost generics and brands than those in tiers 2 and 3. For this benefit, carriers could choose to provide free coverage for any contraceptive methods that are classified as Tier 1 medications, and not cover higher cost contraceptives in tiers 2 and 3.

In that case, female employees who are currently on higher cost contraceptive methods would have to find a lower cost equivalent in Tier 1 to get the drug at no cost. According to UnitedHealthcare, approximately 50% of hormonal contraceptives will be covered in their Tier 1 category of medications. 

The law also limits what types of contraception is covered as part of the benefit. Coverage will include:

• Oral contraceptives, diaphragms and emergency, morning-after pills

• Sterilization, when performed in a medical setting administered by a physician

• Patient counseling and education about contraceptive

Contraceptive items like condoms and spermicidal agents will not be covered under the law. 

Safe Harbor Exemptions

Employees of religious organizations and/or who have safe harbor exemptions will have to wait for these coverage options. Under the law, these employers have at least until August 1, 2013, before the change goes into effect.

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

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