On Friday June 24, 2022, the Supreme Court of the United States released its decision in Dobbs v. Jackson Women’s Health Organization, overruling the landmark 1973 case Roe v. Wade, which recognized a constitutional right to an abortion. As a result, the power to regulate abortions now resides with the states – half of which are expected to restrict or ban abortions entirely in the coming weeks and months.
Employers are now grappling with how this decision impacts the benefits it provides to plan participants, including whether and how to pay for travel to states where the procedures remain available and whether there is any risk of liability to the employer for including this benefit. The answers to these questions will be different depending on several factors such as where the employees reside and whether the plan is fully-insured or self-funded. There are also tax and privacy implications that must be considered.
- Are Employers Required to Cover Abortions?
No. Abortion is not an “essential health benefit” as defined by the Affordable Care Act. However, Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act, provides that health plans would be required to pay for the abortion if the mother's life would be in danger. Additionally, the plan would be required to pay costs associated with complications arising from the abortion (but not the abortion procedure itself).
Fully insured groups should be aware that a handful of states do require health plans to cover the costs associated with abortions and some require this coverage to apply without any cost-sharing or deductible(s).
- Following Dobbs, Can Employer-Sponsored Group Health Plans Provide coverage for Abortions?
Self-insured plans are regulated by the Employee Retirement Income Security Act, so coverage is generally not limited by state law. As such, while abortions might not be available within a particular state, a self-insured plan could provide coverage for abortions where available in other states.
Fully insured plans are governed by state insurance laws, and therefore, coverage available for abortion services under these plans will depend on the laws of the state in which the policy is issued. In states where abortion is prohibited, it is anticipated that these states will prohibit insurance policies issued in the state from covering the costs associated with abortions, even when performed in a state where the abortion remains legal.
- What is a “Trigger” Law? How do these Laws Impact Coverage for Abortions?
Dobbs held that there is no constitutional right to an abortion. As such, the states now have the power to regulate and ban abortions. This makes for a challenging legal landscape where companies will be forced to track the legality of abortions in all states in which their employees reside.
Thirteen states enacted so called “trigger laws” that were designed to make abortion illegal if (and when) Roe v. Wade was overturned.[1] As drafted, some of these laws took effect immediately, others will go into effect thirty (30) days from the Dobbs decision and still others require some type of action by the state’s attorney general, governor or other official to certify that the holding in Roe v. Wade (providing for a constitutional right to an abortion) has been overturned. Once these trigger laws take effect, residents in these states will not be able to legally obtain an abortion in the state and carriers and employers will not be able to pay for abortion services in those states.
In addition to these “trigger” ban states, there are a handful of states which had laws on their books pre-Roe v. Wade which banned or placed restriction on abortions and these laws were never removed.[2] The enforceability of some of these laws is now being litigated.
- Can Employers Pay for an Employee to Travel to Another State to Have an Abortion?
Yes. An employer-sponsored group health plan may cover travel expenses incurred to access abortions in another state where these services remain available. There are several options to achieve this goal, but attention must be paid to the compliance issues and tax implications associated with each approach. Additionally, as discussed below, employers must carefully consider the risk of civil or criminal penalties for providing financial assistance to residents seeking abortions in other states.
Employers seeking to cover the related travel costs to access care may consider one of the following options:
a. Coverage Provided under Group Health Plan
Many employer-sponsored group health plans already cover travel expenses for medical services not available within a geographic area. An employer may seek to add or expand this benefit as part of its group health plan to include coverage for travel and lodging expenses incurred to access abortion services.
Under this approach, the benefit would enjoy tax favorable treatment and the Third-Party Administrator may be able to administer this benefit on the plan’s behalf. However, this option may be unappealing for an employer looking to provide coverage to all of its employees, as this benefit could only be extended to those enrolled in the group health plan. Additionally, if the plan is a High Deductible Health Plan (“HDHP”) with a Health Savings Account (“HSA"), the beneficiary would first have to satisfy the applicable out-of-pocket deductible before any coverage for these benefits would apply in order to preserve HSA eligibility.
b. Coverage under a Health Reimbursement Arrangement (“HRA”)
Another option would be to provide travel and lodging reimbursement under an HRA. Since the HRA would reimburse medical expenses (i.e., the travel costs to access abortion care), it is considered a group health plan. As such, in order to avoid potential compliance issues associated with the Affordable Care Act (“ACA”) rules applicable to stand-alone plans, this approach would require that the HRA be “integrated” with another group health plan or be structured as an “excepted benefit” HRA (“EBHRA”).
An integrated HRA would limit the benefit to only those individuals participating in a group health plan, but it provides greater flexibility with respect to the level of funding provided by the employer for the travel expenses. An EBHRA can be offered to anyone who is eligible for an employer’s major medical plan, but there are pre-determined funding limits set by the IRS which may not cover all of the travel costs incurred by the plan participant. (The limit for 2022 is $1,800 in qualified medical expenses).
c. Reimbursement Provided Outside of Group Health Plan
Some employers might consider offering travel, lodging, and meal reimbursement outside of its group health plan. The benefit of this approach is that it could be offered to any employee, without consideration of whether the employee is enrolled in a group health plan. One of the drawbacks is that the reimbursements provided would be taxable income to the employee. It would also cause the employer to know far more about its employee’s private health care decisions than necessary, which may expose the employer to liability for HIPAA privacy violations or unlawful employment practices.
Any employer considering this approach should consult with counsel to advise them on the appropriate structure and administration of such a benefit.
Any employer seeking to make changes to their plan benefits, including expanding coverage or adding travel reimbursement, should be aware of the requirements of the Mental Health Parity and Addiction Equity Act (“MHPAEA”). The MHPAEA requires that group health plans offering mental health or substance use disorder benefits impose no less favorable benefit limitations on those benefits than on medical/surgical coverage. As such, any plan changes proposed in response to Dobbs should be implemented only after careful consideration with your broker or Graham representative and carrier/TPA to ensure they do not violate the requirements of the MHPAEA, especially if the expansion of benefits is limited to access for abortion services.
- What Liability Does my Company have if we Decide to Provide Reimbursement for Travel/Lodging to Obtain Abortion Services in States Where it is Permitted?
Even before the fall of Roe v. Wade, a few states (most notably Texas) passed laws that provided civil penalties to anyone “aiding or abetting” an abortion procedure. Beyond the issue of whether it is constitutional to restrict an individual’s right to travel to another state to obtain an abortion, there is a question as to whether the “aiding and abetting” prohibition applies to an employer that sponsors a benefit plan that pays for the abortion and/or the travel and lodging expenses associated with receiving the care outside the state. Relatedly, even if a state’s law purportedly applies to anyone who pays for or reimburses abortion costs, there remains the question as to whether ERISA preempts the applicability of these state laws.
While ERISA may preempt the enforceability of state laws seeking to impose civil penalties because they “relate to” an employee benefit plan, state criminal laws of general applicability are not preempted by ERISA. Unfortunately, there is no clear answer to these questions.
If states such as Texas seek to enforce these laws against employers who provide payment for such services, the issue will likely only be resolved following years of litigation. As such, employers must evaluate the risks presented by providing coverage for abortion services and/or travel and lodging expenses based upon the laws of the state where their participants reside.
- How Does this Decision Impact Access and Coverage for Medication Abortions?
Following the Dobbs decision, the Attorney General of the United States stated that the federal Food and Drug Administration (“FDA”) has approved the use of medications used to terminate pregnancies and that States are not able to ban these drugs based upon a disagreement with the FDA’s judgment about its safety and/or efficacy. Attorney General Garland pledged to use the powers of the Justice Department to protect reproductive freedom, but did not go into greater detail as to how this would be accomplished.
The questions surrounding ERISA preemption and the applicability of state laws to a self-funded plan remain present for the issue of medication abortions. As outlined above, there is also the question as to whether a state can ban medication that has been approved by the FDA, or whether the FDA is the sole agency responsible to approve drugs in the United States.
The challenges for employers may be that even if the self-funded plan provides coverage (either through its medical or prescription drug plan) for these approved drugs, there may be no ability for residents in states with abortions to access this medication because either mail-order pharmacies are reluctant to continue future distribution of this medication to certain states or because states enact legislation which prohibits the provision of this medication via telemedicine.
[1] States with trigger laws: Arkansas, Idaho, Kentucky, Louisiana, Mississippi, Missouri, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Utah and Wyoming.
[2] Alabama, Arizona, Arkansas, Michigan, Mississippi, Oklahoma, Texas, West Virginia and Wisconsin.
