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January 11th, 2013
03:40 PM ET

Hobby Lobby finds way around $1.3-million-a-day Obamacare hit - for now

By Eric Marrapodi, CNN Belief Blog Editor

Washington (CNN) - By Friday, Hobby Lobby would have racked up $14.3 million in fines from the Internal Revenue Service for bucking Obamacare. But in keeping with the great American tax tradition, they may have found a loophole.

The company is facing $1.3 million a day in fines for each day it chooses not to comply with a piece of the Affordable Care Act that was set to trigger for them on January 1. The craft store chain announced in December that, because of religious objections, they would face the fines for not providing certain types of birth control through their company health insurance.

The penalty was set to go into effect on the day the company's new health care plan went into effect for the year.

Peter M. Dobelbower, general counsel for Hobby Lobby Stores, Inc. said in a statement released through the Becket Fund that, "Hobby Lobby discovered a way to shift the plan year for its employee health insurance, thus postponing the effective date of the mandate for several months."

The statement continued that "Hobby Lobby does not provide coverage for abortion-inducing drugs in its health care plan. Hobby Lobby will continue to vigorously defend its religious liberty and oppose the mandate and any penalties."

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Last month Supreme Court Justice Sonia Sotomayor rejected the company's appeal for a temporary relief from the steep fines while their case made its way through the lower courts.

Hobby Lobby announced a day after the ruling that it "will continue to provide health insurance to all qualified employees. To remain true to their faith, it is not their intention, as a company, to pay for abortion-inducing drugs."

In September, Hobby Lobby and affiliate Mardel, a Christian bookstore chain, sued the federal government for violating their owners' religious freedom and ability to freely exercise their religion.

The lawsuit says the companies' religious beliefs prohibit them from providing insurance coverage for abortion-inducing drugs. As of August 2012, the Patient Protection and Affordable Care Act, dubbed Obamacare, requires employer-provided health care plans to provide "all Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity," according to the U.S. Department of Health and Human Services.

Churches and houses of worship are exempt from the regulation and a narrow exemption was added for nonprofit religious employers whose employees "primarily share its religious tenets" and who "primarily serve persons who share its religious tenets."

The Internal Revenue Service regulations now say that a group health care plan that "fails to comply" with the Affordable Care Act is subject to an "excise tax" of "$100 per day per individual for each day the plan does not comply with the requirement." It remains unclear how the IRS would implement and collect the excise tax.

A spokesperson for the Justice Department declined to comment on the high court's move last month.

White House officials have long said they believe they have struck an appropriate compromise between religious exemptions and women's health. The White House has not commented specifically on the Hobby Lobby case.

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The Oklahoma City-based Hobby Lobby chain has more than 500 stores that employ 13,000 employees across 42 states, and takes in $2.6 billion in sales. It is still privately held by CEO and founder David Green and members of his family.

"The foundation of our business has been, and will continue to be strong values, and honoring the Lord in a manner consistent with biblical principles," a statement on the Hobby Lobby website reads, adding that one outgrowth of that is the store is closed on Sundays to give its employees a day of rest.

MORE BACKGROUND: Hobby Lobby faces millions in fines for bucking Obamacare

The Hobby Lobby case is just one of many before the courts over the religious exemption aspects of the law. The case represents by far the biggest for-profit group challenging the health care mandate.

Part of the reason Sotomayor rejected their appeal to the Supreme Court she wrote was because their case is still pending in the 10th Circuit Court of Appeals in Denver.

A spokesperson for the Becket Fund said on Friday a date has yet to be set for the case to be heard in the 10th Circuit.

- CNN Belief Blog Co-Editor

Filed under: Belief • Church and state • Courts

soundoff (4,609 Responses)
  1. Kathy

    Lost me as a customer. I liked Hobby Lobby. Business and personal views should be separate even when paying medical expenses. This is part of business and equal rights.

    January 12, 2013 at 6:45 pm |
    • Erik in Houston

      Agreed – won't ever shop there again. They're just an employer – not someone's moral compass. If they're so magnanimous, then pay their workers more.

      January 12, 2013 at 6:48 pm |
  2. rad666

    “free-rider” provision in Obamacare

    If a firm with at least 50 workers has a full-time employee who is getting federally-subsided insurance through an ”exchange,” then that employer must pay a penalty for failing to offer that worker acceptable insurance on the job.
    =========================================
    Easy enough to resolve: fire that worker.

    January 12, 2013 at 6:45 pm |
    • DC1973

      Less 4ssholish way to fix it: give that employee the insurance you're supposed to!

      January 12, 2013 at 6:50 pm |
  3. RustyHinges8

    I realize a lot of women don’t want coverage for abortion, but most insurance companies still include it. It’s really up to the enrollees. So, that means the insurance companies determine if there’s coverage or not on elective abortions. It’s a “separate payment” for abortion beyond the regular premium. So in a way, you can still be punished for wanting the abortion protection, if you need forgiveness. There are also plans you can find, that exclude elective abortion coverage. There are two options….get a plan with elective abortion coverage….or DON’T. What’s the big deal? If you’re like so many others out there….you won’t have to worry, because you can’t afford insurance anyway. As for businesses…just say “NO” to employee abortion coverage and get on with it.

    January 12, 2013 at 6:45 pm |
  4. LInefeeder

    Do you need more proof that a universal health care plan is needed? Dozens of other countries have solved these fanatical problems decades ago. Stop Sharia Law in our med insurance system now!

    January 12, 2013 at 6:44 pm |
  5. Shannon Underwood

    As this is a retail business one has to assume the majority of employees are women. This is a blatant case of abuse, corporate abuse, the do not have to use birth control but they do not have the right to refuse coverage to women. Before the last round of elections I thought the USA was part of the modern world and would have been happy if my children went there now I hope they stay in Canada, where people are not so religious they have lost the ability to reason.

    January 12, 2013 at 6:44 pm |
    • Live4Him

      A perfect example of the loss of reasoning ability. All emotions, no facts.

      January 12, 2013 at 6:46 pm |
  6. don

    Right. Hobby who? It's a marketing ploy that will be crushed. Moving on....

    January 12, 2013 at 6:44 pm |
  7. slimmons

    They aren't abortion inducing drugs....These people are stupid for even continuing to try.

    January 12, 2013 at 6:43 pm |
    • Serious

      It's not an abortion pill? Well since abort means: to fail, cease, or stop at an early or premature stage. I would say that it's an abortion pill. You sound like an idiot.

      January 12, 2013 at 6:54 pm |
  8. mikec

    Add this company to the list of businesses that I will not frequent.

    January 12, 2013 at 6:42 pm |
    • rad666

      And a long list of churches to avoid.

      January 12, 2013 at 6:46 pm |
    • DC

      Whew. There for a second I was afraid life wouldn't go on. Fortunately for millions of people you are insignificant so life will go on.

      January 12, 2013 at 6:49 pm |
  9. rad666

    Penalizing Low Income Households

    ObamaCare provides strong incentives for firms to avoid hiring workers from low-income households. Eligibility for subsidized insurance in the exchanges is based on household income, and firms can be penalized if one of their workers gets subsidized coverage in an exchange. Thus, firms have a strong incentive to find workers who won’t qualify for subsidized coverage, which may also lead to invasions of privacy. For instance, a restaurant might find it better to hire young waiters from upper-income neighborhoods, as opposed to low-income areas, because they would be less likely to qualify for subsidized insurance in the exchanges.

    ObamaCare therefore is penalizing the very households it was supposedly passed to help.

    ObamaCare Watch E21

    January 12, 2013 at 6:42 pm |
    • bam

      being based on romneycare.........

      January 12, 2013 at 6:43 pm |
    • DC1973

      That's not there to keep them from hiring lower income people.

      That's there to keep them from paying their employees so little that they *still* can't afford to buy insurance.

      Ya know, kinda like WalMart? The fact that their employees, even the full time ones, make so little that they're still eligible for SNAP, TANF, and Medicaid?

      January 12, 2013 at 6:48 pm |
  10. R.U. Kidding

    I'm telling everyone I know to boycott HOBBY LOBBY due to their practicing religious persecution.

    January 12, 2013 at 6:42 pm |
    • DC

      Big deal.

      January 12, 2013 at 6:43 pm |
    • R.U. Kidding

      Persecuting employees because they don't have the same religious beliefs as your 'corporation' is a big deal.

      January 12, 2013 at 6:46 pm |
    • rad666

      Will you be telling everyone you know to avoid churches also?

      January 12, 2013 at 6:48 pm |
    • Jim

      OK, I'll tell everyone I know to shop there.

      January 12, 2013 at 6:49 pm |
    • Alex

      Seriously?????? So it's only bad when the religious do it, but it's completly okay for the non-believers! My my, you are dense.

      January 12, 2013 at 6:51 pm |
    • Greg Kells

      I'm sure that'll teach 'em. If Chik-fil-a taught us anything it's that left-wing boycotts are great for business. I don't think they could buy better marketing than having a group of wingnuts boycotting them. I'm an atheist, that is in favor of gay marriage, and doesn't have any problem at all with contraceptives, but I'm willing to pretend if you promise to boycott my business too.

      January 12, 2013 at 6:56 pm |
    • Serious

      If they don't like their beliefs, they don't have to shop nor work there. I haven't heard of anyone being forced into working somewhere against their will. The last time I checked that was slavery.

      January 12, 2013 at 7:21 pm |
  11. Mike

    What a great Christian message...hoard all the profits, pay your employees slave wages with no health care, but it's okay because we're not going to comply with tax code because we'll pull the good old religion card. I don't plan on paying my taxes either, because I'm celebrating the feast of maximum occupancy today. Oh that doesn't count? How dare you?

    January 12, 2013 at 6:42 pm |
    • ol cranky

      actually their "good Christian message" is that one must lie about Christianity and its requirements in order to be a "good Christian". The Hobby Lobby complaint actually invented a drug that doesn't exist to fight having to cover it (I think they included a "week after pill") and are basically mandating that if their understanding of their religion is that Christianity mandates they ignore fact in order to reject something in order to claim that contraception is abortifacient when it is not.

      January 12, 2013 at 6:50 pm |
    • Yanni

      You obviously didn't read all of the article. Hobby Lobby does, and will continue to, offer health coverage to its employees. Under the ACA they could stop offering coverage and pay the $2,000 (I think that is the amount per employee) penalty and save big bucks. At least give them credit for providing coverage.

      January 12, 2013 at 6:57 pm |
  12. colleenbrickman@att.net

    Now if this were an animal issue...everyone would be in it. But since it has to do with unborn babies we don't care. Aborting babies is not considered preventative. It's MURDER

    January 12, 2013 at 6:41 pm |
    • Mike

      Maybe adopt a couple and then we'll talk

      January 12, 2013 at 6:42 pm |
    • Mel

      Too bad you people don't care for the ones who are already here. The ones who who are starving, abused, neglected...etc.

      Once they are out of the womb you couldn't care less. If they starve or die from their parents...its God's Will to you. LOL

      Thats why I will always refer to the fanatics of this Country as the CHRISTIAN TALIBAN

      January 12, 2013 at 6:44 pm |
    • bam

      yeah cuz birth control is an abortion drug....

      if this was an ISLAMIC company we would be all over it. christian taliban 4life

      January 12, 2013 at 6:44 pm |
    • ol cranky

      this has nothing to do with abortion except for the fact that Hobby Lobby asserts their right to impose it's belief that preventing conception is abortion by intentionally mislabeling contraception as abortion. they are not required to include RU-486 or surgical abortions under their plan just to include contraceptive coverage in the same manner that other medications are covered.

      January 12, 2013 at 7:45 pm |
  13. schra

    I think they should just do what my catholic employer does. under insurance coverage it says * we do not support or condone the use of birthcontrol but state statue # requires companies of our size provide birth control coverage in our plan. this is in no way a stance of company merely compliance with the law.

    January 12, 2013 at 6:41 pm |
    • DaveLake

      Great post-so simple!

      January 12, 2013 at 6:45 pm |
  14. teddyg

    Another company run by gray-haired white Republicans. A vanishing breed getting in their last shots.

    January 12, 2013 at 6:41 pm |
  15. Kay

    If I want rental car coverage on my insurance policy, I pay extra. If someone wants before or after birth control pills, why can't they pay the extra for it? Wouldn't that solve all this bickering and be more fair?

    January 12, 2013 at 6:41 pm |
    • bam

      u obviously dont understand their argument.... they want to force their religious beliefs on their employers

      January 12, 2013 at 6:47 pm |
    • Sarah

      Because it's not fair.

      Due to the fact that many states (especially in the South) are getting more and more restrictive about Planned Parenthood and more and more locations of free or low cost birth control closing, it's getting more and more difficult to obtain birth control, either the before stuff or the morning after stuff.

      If you're a company that you offer health insurance, you need to cover everything. Period. It's like saying you shouldn't have to cover diabetes because all of the testing equipment is too expensive.

      January 12, 2013 at 6:58 pm |
  16. Dino

    We just started a new religion that does not believe in paying taxes. Where do we go register our religion?

    January 12, 2013 at 6:41 pm |
    • bam

      FYI religious organizations are tax exempt and are not allowed to play politics...
      when will that be enforced?

      January 12, 2013 at 6:42 pm |
  17. Arvn Huac

    It's a temporary loophole, good for only a few months . . . if it even holds up. Remember, this is the claim of the company's attorney. That don't mean it will hold up.

    And even if it does get past those few months, I wonder how long Hobby Lobby can withstand $400,000,000 a year in fines?

    All the government has to do is wait.

    January 12, 2013 at 6:41 pm |
  18. Mel

    I wish the Christian Taliban of this country would make the same effort to care for the abused and neglected children that are already alive in this country.

    January 12, 2013 at 6:40 pm |
    • depotman

      What are you doing?

      January 12, 2013 at 6:41 pm |
    • Kay

      I believe that religious organizations give more in humanitarian aid than atheist organizations. But this is just my opinion..

      January 12, 2013 at 6:44 pm |
  19. Diane

    I am all for religious freedom, but "businesses" religious or not, should not be able to deny health care coverage because of their religious beliefs. If a company decides that chemotherapy is poison and is a sin, and against their religious beliefs to put poison into a human body then it's also okay for them to refuse to pay insurance premiums on a person with cancer getting chemo? It's really none of the employers business WHAT medical care I am getting. Just pay the premiums and be done with it.

    January 12, 2013 at 6:40 pm |
    • DC1973

      I agree, but at the same time, I don't. The ACA is better than the system we've had for far too long, but it's still not what we need.

      We need to get rid of the insurance companies entirely and go to a single-payer system, like every other developed nation on the planet. But that's not going to happen, because the insurance industry has too much money, too much pull, and too many people who work for it.

      January 12, 2013 at 6:44 pm |
    • Arvn Huac

      So by the same logic, a business owned by a fundamentalist Jehovahs Witness can refuse to carry health care at all because it violates their freedom of religion?

      January 12, 2013 at 6:44 pm |
    • Kay

      They aren't denying Medical coverage, they just don't want forced to pay for BC coverage.

      January 12, 2013 at 6:45 pm |
  20. jo

    Your are right OBAMA...they will try all their 'USUAL' tricks.....

    January 12, 2013 at 6:40 pm |
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About this blog

The CNN Belief Blog covers the faith angles of the day's biggest stories, from breaking news to politics to entertainment, fostering a global conversation about the role of religion and belief in readers' lives. It's edited by CNN's Daniel Burke with contributions from Eric Marrapodi and CNN's worldwide news gathering team.