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ObamaCare FAQ of the Month: What Does the Hobby Lobby Decision Mean for My Company?

July 2014

By: Peter E. Hansen, Esq.

As you may have heard, the Supreme Court recently ruled that some for-profit companies are exempt from portions of the Affordable Care Act's birth control mandate. Here is a brief (and oversimplified) explanation of the Court's decision: closely held for-profit corporations such as Hobby Lobby are "people" under the Religious Freedom Restoration Act (RFRA), and are capable of exercising religion. The RFRA prohibits the government from burdening people's freedom to exercise religion; thus, it cannot require Hobby Lobby to pay for employees' use of select forms of contraception because use of such contraception violates the owners' religious convictions.

The decision will affect some employers immediately, but only those: (1) who are a closely held corporation (i.e., a company controlled by five or fewer individuals); and (2) whose shareholders have sincere and congruous religious beliefs relating to contraceptives. Given that the contraception mandate only applies to employers with fifty or more full-time employees, this appears to be a fairly limited number of employers.

The ultimate effect on employers that do not meet the above criteria is far less clear. On one hand, the ruling may well open the door to future exemptions that reach further than this relatively limited holding. Justice Ginsburg (in dissent) predicted that the decision will invite "for-profit entities to seek religion-based exemptions from regulations they deem offensive to their faith." On the other hand, several representatives plan to propose legislation that would essentially nullify the ruling. As with most issues surrounding the ACA, we may have to simply wait and see.

Questions? Suggestion for a future Obamacare FAQ of the Month? Please contact WS Attorney Peter E. Hansen at (262) 560-9696, or email pehansen@wesselssherman.com .