What does the Catholic Church believe and teach about the state of persons who are baptized but not in full communion with the Catholic Church? There are two not entirely uncommon misunderstandings of the Catholic Church's teaching on this question. One is that such persons are entirely separated from the Body of Christ and from Christ. The other is that such persons are perfectly joined to the Body of Christ and to Christ.
In order to understand the Catholic Church's teaching on this question, we first have to understand what she believes about baptism. Consider the following paragraphs from the Catechism:
"Through Baptism we are freed from sin and reborn as sons of God; we become members of Christ, are incorporated into the Church and made sharers in her mission" (CCC 1213)
"Baptism makes us members of the Body of Christ: "Therefore . . . we are members one of another." Baptism incorporates us into the Church. From the baptismal fonts is born the one People of God of the New Covenant, which transcends all the natural or human limits of nations, cultures, races, and sexes: "For by one Spirit we were all baptized into one body." (CCC 1267)
According to the Catholic Church, in baptism, the Holy Spirit frees us from sin and gives us new birth and incorporates us into Christ and His Body, the Church. But, baptism is not the end of the story.
"From the time of the apostles, becoming a Christian has been accomplished by a journey and initiation in several stages. This journey can be covered rapidly or slowly, but certain essential elements will always have to be present: proclamation of the Word, acceptance of the Gospel entailing conversion, profession of faith, Baptism itself, the outpouring of the Holy Spirit, and admission to Eucharistic communion." (CCC 1229, my emphasis)
Notice that according to the Catholic Church, becoming a Christian is not accurately understood as an instantaneous event, but rather as a process involving "several stages." For adult converts, baptism follows a profession of faith. But baptism is not the end of the process of becoming a Christian. Baptism is followed by an additional sacrament (Confirmation / Chrismation) in which one receives the outpouring of the Holy Spirit. And this is followed by admission to the highest sacrament: Holy Eucharist, a sign of full communion with the Church.
That is because although baptism incorporates a person into the Church, it does not bring a person into full communion with the Church if the person being baptized professes anything contrary to the true faith. Baptism puts such a person into an actual but "imperfect communion" with the Body of Christ. In his encyclical titled Mystici Corporis Christi, Pope Pius XII writes:
Actually only those are to be included as members of the Church who have been baptized and profess the true faith, and who have not been so unfortunate as to separate themselves from the unity of the Body, or been excluded by legitimate authority for grave faults committed. [Para. 22]
A baptized person who, due to invincible ignorance does not profess the true faith may, in virtue of his baptism, retain imperfect communion with Christ and His Church. That is, he can possibly remain in a state of grace. Likewise, a baptized person who does profess the true faith may, by committing a mortal sin, cease to be in a state of grace. Being in full communion with the Catholic Church does not entail being in a state of grace, and being in a state of grace does not entail being in full communion with the Catholic Church. But being in full communion with Christ's Church provides the greatest access to the sacramental means of grace, and thus the means of sanctification and perfection.
One objection here is that the online translation of Unitatis Redintegratio says the following:
But even in spite of them it remains true that all who have been justified by faith in Baptism are members of Christ's body,(21) and have a right to be called Christian, and so are correctly accepted as brothers by the children of the Catholic Church. (Unitatis Redintegratio, 3)First, the translation is misleading. The Latin does not say "are members of Christ's body." It reads, "Christo incorporantur," i.e. are incorporated into Christ. Second, this statement references the Council of Florence, which stated "Holy baptism holds the first place among all the sacraments, for it is the gate of the spiritual life; through it we become members of Christ and of the body of the church." (source) The Council of Florence is only teaching that baptism makes one a member of the Body of Christ. It is not teaching that baptized persons who deny some article of the Catholic faith, or who are in a state of excommunication or are in schism from the Church, are members of the Church. The meaning of this phrase "Christo incorporantur" in Unitatis Redintegratio 3 in reference to Protestants is specified earlier in that same paragraph, which explains, "For men who believe in Christ and have been properly baptized are brought into a certain, though imperfect, communion with the Catholic Church. Undoubtedly, the differences that exist in varying degrees between them and the Catholic Church -- whether in doctrine and sometimes in discipline, or concerning the structure of the Church -- do indeed create many and sometimes serious obstacles to full ecclesiastical communion." As soon as a baptized person denies some article of the Catholic faith, or separates himself from the visible unity of the Catholic Church, then he is no longer a member in the proper sense defined by Mystici Corporis Christi, even though he remains imperfectly joined to the Church through baptism.
Though baptism does not entail full communion, baptism is the gateway for all the subsequent sacramental graces, as the Catechism explains:
"Baptism constitutes the foundation of communion among all Christians, including those who are not yet in full communion with the Catholic Church: "For men who believe in Christ and have been properly baptized are put in some, though imperfect, communion with the Catholic Church. Justified by faith in Baptism, [they] are incorporated into Christ; they therefore have a right to be called Christians, and with good reason are accepted as brothers by the children of the Catholic Church." "Baptism therefore constitutes the sacramental bond of unity existing among all who through it are reborn." (CCC 1271, my emphasis)
"The Church knows that she is joined in many ways to the baptized who are honored by the name of Christian, but do not profess the Catholic faith in its entirety or have not preserved unity or communion under the successor of Peter." Those "who believe in Christ and have been properly baptized are put in a certain, although imperfect, communion with the Catholic Church. With the Orthodox Churches, this communion is so profound "that it lacks little to attain the fullness that would permit a common celebration of the Lord's Eucharist." (CCC 838, my emphasis)
This statement shows that the Protestant is "joined in many ways" to the Catholic Church, being in a "certain, although imperfect, communion with the Catholic Church". (The communion of the Orthodox with the Catholic Church is much fuller, for we share the same sacraments, apostolic succession, and the faith as defined by the first seven Ecumenical Councils.) When a Protestant was baptized in a Protestant community (assuming it was a valid baptism), he was brought into an actual, but "imperfect, communion with the Catholic Church." Being "in the Catholic Church" is not a simple either/or; there are different stages of being "in" (or "in communion" with) the Catholic Church. Baptism is the first stage, the foundation for the others. It is the will of Christ, according to the Catholic Church, that all baptized believers be fully incorporated into His Body, the Church. This involves professing the very same faith that the Church teaches, sharing in all the same sacraments (especially the Eucharist), and recognizing and submitting to the successor of Peter and the bishops in communion with him as the successors of the Apostles. The Catechism states:
"For it is through Christ's Catholic Church alone, which is the universal help toward salvation, that the fullness of the means of salvation can be obtained. It was to the apostolic college alone, of which Peter is the head, that we believe that our Lord entrusted all the blessings of the New Covenant, in order to establish on earth the one Body of Christ into which all those should be fully incorporated who belong in any way to the People of God." (CCC 816, my emphases)
Here's what it means to be "fully incorporated" into the Catholic Church:
"Fully incorporated into the society of the Church are those who, possessing the Spirit of Christ, accept all the means of salvation given to the Church together with her entire organization, and who - by the bonds constituted by the profession of faith, the sacraments, ecclesiastical government, and communion - are joined in the visible structure of the Church of Christ, who rules her through the Supreme Pontiff and the bishops. Even though incorporated into the Church, one who does not however persevere in charity is not saved. He remains indeed in the bosom of the Church, but 'in body' not 'in heart.'" (CCC 837)
It should be clear from this in what sense the Protestant is not "fully incorporated" into the Catholic Church. The Protestant, though having some communion with the Church through his baptism, does not profess the entire Catholic faith, share the other Catholic sacraments or accept and submit to the government of the Catholic Church. Does that mean that those baptized persons who are not in full communion with the Catholic Church are unable to grow in Christ, or unable to be saved? No. The Catechism explains:
"Furthermore, many elements of sanctification and of truth" are found outside the visible confines of the Catholic Church: "the written Word of God; the life of grace; faith, hope, and charity, with the other interior gifts of the Holy Spirit, as well as visible elements." Christ's Spirit uses these Churches and ecclesial communities as means of salvation, whose power derives from the fullness of grace and truth that Christ has entrusted to the Catholic Church." (CCC 819)
Notice the phrase "visible confines of the Catholic Church." Even though, as we saw above, the Protestant is, through his baptism, in an "imperfect, communion with the Catholic Church", yet because he has not been received into full communion with the Catholic Church, he is "outside the visible confines of the Catholic Church." So, there are degrees or stages of union with (and separation from) the Catholic Church.
Does that mean that those baptized persons who believe in Christ but are not fully incorporated into the Catholic Church are guilty of the sin of separation? Not necessarily.
"However, one cannot charge with the sin of the separation those who at present are born into these communities [that resulted from such separation] and in them are brought up in the faith of Christ, and the Catholic Church accepts them with respect and affection as brothers . . . . All who have been justified by faith in Baptism are incorporated into Christ; they therefore have a right to be called Christians, and with good reason are accepted as brothers in the Lord by the children of the Catholic Church." (CCC 818)
Those who are born into ecclesial communities that are not in full communion with the Catholic Church are not guilty of the sin of separating from the Catholic Church. From the point of view of the Catholic Church, they are brothers and sisters in Christ, even though they are not yet in full communion with the Church. The Catholic Church prays that all such persons and communities will be restored to full communion with her. Why are such persons not guilty of the sin of separating from the Catholic Church? Because they did not choose to separate from the Catholic Church, nor do they "know that the Catholic Church was founded as necessary by God through Christ".
"How are we to understand this affirmation ["Outside the Church there is no salvation"], often repeated by the Church Fathers? Re-formulated positively, it means that all salvation comes from Christ the Head through the Church which is his Body:
Basing itself on Scripture and Tradition, the Council teaches that the Church, a pilgrim now on earth, is necessary for salvation: the one Christ is the mediator and the way of salvation; he is present to us in his body which is the Church. He himself explicitly asserted the necessity of faith and Baptism, and thereby affirmed at the same time the necessity of the Church which men enter through Baptism as through a door. Hence they could not be saved who, knowing that the Catholic Church was founded as necessary by God through Christ, would refuse either to enter it or to remain in it." (CCC 846, my emphasis)
The Church is very clear on this point. Those who know that the Catholic Church was founded as necessary by God through Christ, and refuse either to enter it or remain in it, cannot be saved. (This is because schism is a grave matter, and such persons would be committing a mortal sin.) That is why those who are born into separated ecclesial communities are not ipso facto guilty of the sin of separation (i.e. schism), because they know not what they do. They do not know that the Catholic Church is the Church that Christ founded and to which all men are called to enter for salvation as that of which Noah's ark was a type. Hence the Catechism says:
"This affirmation is not aimed at those who, through no fault of their own, do not know Christ and his Church: Those who, through no fault of their own, do not know the Gospel of Christ or his Church, but who nevertheless seek God with a sincere heart, and, moved by grace, try in their actions to do his will as they know it through the dictates of their conscience - those too may achieve eternal salvation." (CCC 847)
The statement "no salvation outside the Church" refers to this broadest, minimal degree of communion with the Catholic Church. That is why Catechumens (who by definition have not yet been baptized), can still be saved even if they die before their baptism, because they have what is called a "baptism by desire," and thus are already (in an initial and imperfect way) spiritually joined to the Catholic Church.
"Catechumens "are already joined to the Church, they are already of the household of Christ, and are quite frequently already living a life of faith, hope, and charity." (CCC 1249)
The Catechism thus teaches that salvation always comes from Christ through the Church, which is His Body. The necessity of baptism for salvation is a basic teaching of the Church, because the necessity of baptism is understood to be a basic teaching of Christ. The Church's teaching that it is possible for those who have never heard the Gospel to achieve eternal salvation does not negate the necessity of baptism or the necessity of Christ or His Church. It is an acknowledgment that the mercy and power of God are not necessarily limited to what we perceive with our senses. Just because we do not see a person receiving baptism, that does not mean we are justified in concluding that this person, upon death, must be in hell. That is why we cannot justifiably say that "that atheist" who died some time ago is in hell. The Church makes official declarations about certain people being in heaven (i.e. Saints), but it does not presume to be judge of which persons received eternal damnation. The Church can spell out and explicate the state of soul that leads to eternal damnation, but she does not presume to determine the eternally damned state of any particular soul; she leaves them to the mercy of God. The Catholic Church does teach that full incorporation into the Church is so important that those who know that the Catholic Church was founded as necessary by God through Christ, and yet refuse to enter it or remain in it, cannot (in that state) be saved.
The short of it is that through baptism the Protestant is actually, but imperfectly, and only invisibly, joined to the Catholic Church. Baptism is a Catholic sacrament, because it was entrusted by Christ to the Catholic Church, and has its validity through the Catholic Church, even when it is administered by a Protestant. But a Protestant (while Protestant) is not fully incorporated into the Catholic Church, or in "full communion" with the Catholic Church. That is why a Protestant cannot receive the Holy Eucharist at a Catholic parish. Does that mean that a Protestant's salvation is in jeopardy? Yes and no. Those Protestants who do not know "that the Catholic Church was founded as necessary by God through Christ" can be saved. But no one should use the Church's acknowledgment that those not in full communion with the Church can be saved as an excuse for not seeking full communion with the Church, or as a justification for remaining in schism from the Church that Christ founded. Apart from the sacraments Christ established in His Church it is much more difficult to attain to the holiness without which no one will see the Lord.
For more on the relation of baptism to Christian unity, see my post titled "Baptism and Christian Unity".