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In July 2023, the U.S. Food and Drug Administration (FDA) approved Opill, the first over-the-counter daily oral contraceptive pill available for purchase in the United States. Opill will be available in early 2024 for purchase without a prescription. Opill may be covered by the various types of insurance plans.

The Affordable Care Act (ACA) and its implementing regulations, including Section 2713, require most private health insurance plans and Medicaid expansion programs to cover all FDA-approved contraceptive methods cost-free to patients. Contraception is part of the ACA’s guaranteed coverage of women's preventive services. However, there is no federal requirement that health plans cover contraception cost-free unless a patient has a prescription. 

Section 2713 of the ACA applies to all private plans including fully insured and self-insured plans in the individual, small group, and large group markets, unless they are “grandfathered” plans. Section 2713 also applies to plans offered by state Medicaid programs in states that expanded Medicaid after the ACA was passed in 2010. As of 2023, 40 states and D.C. have adopted the Medicaid expansion.

Medicaid

The ACA requirement for coverage of preventive care services, including contraception, without cost-sharing applies only to Medicaid expansion enrollees and Medicaid enrollees in Alternative Benefit Plans. Under federal law, Medicaid requires a prescription to cover all drugs, even those that are available without a prescription like Opill. Thus, over-the-counter drugs, which are generally not prescribed, are excluded from the cost-free coverage mandate.

To ensure Opill can still be a viable alternative to prescription contraceptives for women, states may choose to allocate their own funds to cover OTC contraceptives for Medicaid enrollees without a prescription. To do so, they must submit a State Plan Amendment (SPA) to the Centers for Medicare & Medicaid Services (CMS) to cover OTC drugs and products. After obtaining CMS approval, states can determine which OTC drugs and products their Medicaid programs will cover. However, federal funds may not be used to cover OTC drugs without a prescription for Medicaid enrollees.

Private Plans

Private health insurance plans are regulated at both the state and federal level. Federal laws establish a minimum level of requirements (coined the “federal floor”), and states may impose additional requirements on plans sold within their states. The ACA requires most private health plans to cover, without cost sharing, the full range of FDA-approved contraceptive methods prescribed to women by medical providers.

There is no federal requirement that plans cover contraception for free if the contraception is not prescribed by a medical provider. In fact, most health plans usually require a prescription to indicate medical necessity, including for contraceptives that do not require a prescription. To close this nonprescription coverage gap, eight states have passed laws that require certain health plans to cover at least one type of over-the-counter contraception without a prescription or cost-sharing. However, these state insurance laws only apply to private health plans regulated by the states. As Opill becomes available, more states may follow suit and impose additional requirements on plans to cover certain OTC contraception without cost-sharing.

Employer-Sponsored Plans

Most employer-sponsored health plans also offer cost-free prescription contraception. Section 2713’s preventive services coverage standard applies to all employer-sponsored plans—whether self-insured and exempt from state insurance regulation, or fully insured and subject to state insurance laws.

Because ERISA applies to self-insured plans and preempts state insurance regulations of self-insured plans, employers offering self-insured medical benefits are regulated at the federal level. Federal law (the ACA) dictates that plans may require patients to have a prescription for free contraception so self-insured plans—which cover an estimated sixty-five percent of America’s workforce—may impose cost-sharing on enrollees that purchase OTC contraceptives without a prescription. For fully-insured plans, subject to state regulation, states could still require plans to cover Opill cost-free.

The only plans that are exempt from the ACA’s preventative care mandate are grandfathered health plans and plans offered by religious employers. For a plan to be considered “grandfathered,” the plan must have been in existence prior to March 23, 2010, and the plan must not have made any significant changes to its coverage since its inception. Religious employers—primarily churches and institutions of worship—are also exempt from the ACA contraceptive coverage mandate.

Looking Ahead

Because the ACA’s no-cost preventative care requirement does not extend to over-the-counter contraception that was not prescribed by a medical professional, many health plans in America may have a loophole to require cost-sharing of Opill and future OTC contraceptives. Advocates of Opill support an amendment of federal law to remove the language that requires a prescription for contraceptives to be cost-free to ensure health plans across America cover Opill. Regulatory changes at the federal and state levels remain to be seen but are increasingly likely as more patients and consumers purchase Opill in the coming year.

If you have any questions about contraceptive coverage or any healthcare matter, please reach out to BMD Healthcare Partner Ashley Watson at abwatson@bmdllc.com.