Little Sisters: When Exemptions Are Not Enough

A few more thoughts on the issue I discussed in this morning’s post, about whether Little Sisters of the Poor can claim infringement of their religious freedom when their insurance plan, legally known as a “church plan,” is not subject to the statutes and regulations that give the government authority to impose a tax for non-compliance with the Affordable Care Act.

Simply put, the Employee Retirement Income Security Act, or ERISA, contains an exemption for “church plans”—pension or insurance plans that are for the benefit of employees of churches or other religious organizations. If “church plans” are exempt from ERISA, they are exempt from the contraception coverage because, in essence, the government has no authority to force the employers to comply, beyond filling out the “self-certification” forms, which will not result in any actual insurance coverage for contraception. But Little Sisters is arguing first, that filling out the “self-certification” forms make it complicit in sinful activity and second, that the government might change the rules at some point down the road. 

According to another recent case ruling on religious non-profits’ challenges to the contraception coverage benefit, the government belatedly recognized that “church plans” would be exempt under ERISA well after the lawsuit had been filed, raising questions about whether the Department of Health and Human Services, in crafting the accommodation, realized that many organizations who could take advantage of the accommodation had insurance contracts with exempted “church plans,” thus effectively making them just as exempt as churches are from the contraception coverage requirement. 

In Roman Catholic Diocese of New York v. Sebelius, Judge Brian Cogan, in ruling in favor of the plaintiffs, recognized that “[t]he Government states that it thus has no authority to require the plaintiffs’ TPAs [third party administrators] to provide contraceptive coverage at this time.” But he nonetheless concluded that the “plaintiffs’ alleged injury is that the Mandate renders them complicit in a scheme aimed at providing coverage to which they have a religious objection. This alleged spiritual complicity is independent of whether the scheme actually succeeds at providing contraceptive coverage.” In other words, to Judge Cogan it did not matter that the insurance plan isn’t required to provide the coverage at all; the “spiritual complicity” can take place even if the purported sinful activity does not.

When one looks at the history of the “church plan” exemption, though, the arguments that the contraception benefit coverage violates the religious freedom of anyone seem even more far-fetched. The exemption, after all, is a result of the broad leniency granted to religious organizations that secular organizations do not enjoy. The objectors, then, are complaining that notwithstanding a broad exemption, they are not exempted enough.

According to a legislative history compiled by the Pension Rights Center, a consumer rights group, the church plan exemption “was included because lawmakers were concerned that the review of a church’s books and records by the federal pension insurance agency created by the new law might be seen as an unjustified invasion of the confidential relationship’ between ‘churches and their religious activities.’” In other words, the church-state wall there was seen as a guard between a meddling government and a church’s financial affairs, an argument used in other contexts to exempt churches and related organizations from government oversight.

At the time of ERISA’s passage, in 1974, the exemption only applied to churches, not to other religious organizations. (Sound familiar?) Yet Congress included in the 1974 law a temporary exemption for those religious non-profits, which was to expire in 1982.

But that exemption, too, would be extended. According to the PRC:

In 1980, at the urging of the Southern Baptist Convention Annuity Board, Senator Herman Talmadge introduced legislation to amend ERISA to make the special temporary rule permanent. The proposed legislation also clarified that incorporated organizations such as the SBC Annuity Board, and similar unincorporated organizations that were not churches themselves, but had been created by churches and church conventions to administer their pension and health plans could continue to operate.  

The legislative history and contemporaneous statements, according to PRC, “confirm that the intent of the new law was solely to make permanent the special temporary rule allowing a plan established by a church to also include the employees of church-related employers, and to permit plans administered by organizations like the SBC Annuity Board, called ‘church pension boards,’ to be permanently exempt from private pension law.” But in subsequent years the IRS issued rulings “to also exempt plans established by non-church employers that are administered by informal benefit committees.” (emphasis in original) As a result “of the expansive interpretation of the law by the IRS, countless teachers, nurses, social workers, teachers, and other lay employees have been improperly denied critically important pension insurance and other protections conferred by Congress,” PRC concludes. These IRS rulings, “which were issued to employers without the knowledge of their employees, made it possible for the employers to avoid all of the requirements of federal law – without having to inform employees. In many cases, the employees had been fully protected by the federal law for their entire careers before their plans applied for church plan status,” PRC writes

According to Politico this morning, an unnamed White House official is “confident that our final rules strike the balance of providing women with free contraceptive coverage while preventing non-profit religious employers with religious objections to contraceptive coverage from having to contract, arrange, pay, or refer for such coverage.” In the case of employers with “church plans,” though, it seems like their employees will be out of luck, by the government’s own admission. I’m not sure which part is more inexplicable: that the government didn’t figure this out sooner, or that the religious objectors are still complaining about it.

Sarah Posner, author of God’s Profits: Faith, Fraud, and the Republican Crusade for Values Voters, covers politics and religion. Her work has appeared in The Washington Post, The Guardian, The Atlantic, The American ProspectThe NationSalon, and other publications. Follow her on TwitterRSS feed Email

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