When the Affordable Care Act defined contraceptive coverage as one of the essential benefits employers must provide free of charge, it set off a firestorm of protest from religious groups. A final rule, released Friday, may suppress the flames.

The revised rule will make it easier for some employers with religious objections to avoid providing contraceptive coverage. However, the Department of Health and Human Services will not allow for-profit companies to exempt themselves from the contraceptive mandate.

The final rule comes after much squabbling and many legal battles involving businesses and nonprofits who objected on religious grounds to being forced to provide the contraceptives to employees.

The ACA’s contraceptive mandate, which took effect Aug. 1, 2012, says all new insurance policies must provide birth control with no copayment. The requirement has riled political conservatives who say it encroaches on their religious freedom by forcing some faith-based employers to provide contraceptive coverage against their will.

“Today’s announcement reinforces our commitment to respect the concerns of houses of worship and other nonprofit religious organizations that object to contraceptive coverage, while helping to ensure that women get the care they need, regardless of where they work,” Health and Human Services Secretary Kathleen Sebelius said in a statement.

Friday’s final rule is “very similar” to the proposed rule HHS published in February 2012. Churches themselves were exempt from the rule, but hospitals, universities, and other organizations with religious affiliations were not.

The definition of “religious employers” who could be exempt from the rule was made simpler after feedback HHS received. The final rule eliminates requirements that a religious employer:

  Have the inculcation of religious values as its purpose
  Primarily employ persons who share its religious tenets
  Primarily serve persons who share its religious tenets

The streamlined definition of “religious employer” - which primarily consists of churches and other houses of worship - is based solely on Internal Revenue Service code. Only those religious employers will be completely exempt from the contraceptive mandate.

Friday’s final rule also solidifies an agreement the Obama administration previously made with nonprofit religious organizations like hospitals and universities that object to contraceptive coverage, although critics have complained that the definition of nonchurch religious organizations is too narrow and difficult to meet.

Under the agreement, these organizations arrange for separate coverage through health plans women can enroll in at no cost.

Religious organizations must notify beneficiaries that they object to contraception coverage and provide information on the separate, no-cost contraceptive coverage. Self-insured health plans must notify their third party administrator, who must inform enrollees of arrangements to provide no-cost contraceptive coverage.

The final rule gives more detail on how health plans can implement the accommodations HHS now allows for religious organizations, Michael Hash, director of HHS’s Office of Health Reform, said Friday.

“I think it’s a much brighter line, clearer line,” Hash said in a call Friday with reporters.

The rule takes effect Jan. 1.

HHS didn’t conduct an impact analysis on its rule, the department said Friday, but believes it will be cost-neutral.

To compensate health insurers for the money they will now need to pay out for contraceptive coverage for these employees, HHS will reduce the fees that insurers must pay to participate in the ACA’s federally run health insurance exchanges.

For-profit companies who are suing HHS over the contraceptive mandate are likely to continue their suits; Friday’s rule does not soften the Obama administration’s stance on them.

“Unfortunately the final rule announced today is the same old, same old. As we said when the proposed rule was issued, this doesn’t solve the religious conscience problem because it still makes our nonprofit clients the gatekeepers to abortion and provides no protection to religious businesses,” Eric Rassbach, deputy general counsel for the Becket Fund for Religious Liberty, said in a statement. “The easy way to resolve this would have been to exempt sincere religious employers completely, as the Constitution requires. Instead this issue will have to be decided in court.”

The Becket Fund, which is based in Washington, counts 61 lawsuits and more than 200 plaintiffs from those opposing the ACA’s mandate. Not all of them are for-profits, but one for-profit—Oklahoma City-based Hobby Lobby—is leading the charge in the courtroom.

A federal appeals court said Thursday a lower court erred in its ruling that Hobby Lobby and sister company Mardel must comply with the ACA mandate that it provide birth control—including emergency contraception—in health plans to employees.

The Tenth Circuit Court of Appeals in Denver said the arts-and-crafts giant should be given the opportunity to show its religious beliefs would be violated by either complying with the law or being forced to pay large fines starting next month.

The ruling could open the door for numerous other for-profit businesses who object to providing the contraceptives to employees.

“Today’s ruling was the most decisive victory yet against the abortion-pill mandate,” Ashley McGuire, senior fellow at the Catholic Association in Alexandria, Va., said in a statement, referring to emergency contraception. “The number of religious freedom victories against the mandate continues to mount, sending the clearest signal possible to the Obama administration that no employer, no matter where he or she works, should be forced to choose between violating his or her conscience and paying a fine.”

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By David Pittman, Washington Correspondent, MedPage Today