In the wake of the United States Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, many companies have announced plans to assist employees in accessing abortion services, including providing travel assistance to employees located in states where abortion is now illegal. There are important legal considerations for employers to weigh when considering whether to provide such benefits.
Impact of State Laws
Employers should consider whether these potential benefits may be illegal in the states where they operate. It is also important to understand if the employer’s assistance could be viewed as aiding and abetting the provision of abortion services. These laws will likely guide the type of coverage and assistance employers provide.
For Iowa employers, Iowa law currently does not restrict private insurance coverage for abortion services, nor does it criminalize the aiding and abetting of abortion services. However, since the Iowa Supreme Court also recently held abortion is not protected under the Iowa Constitution, nothing prevents the Iowa legislature from passing abortion restrictions in the future.
Employers in states that criminalize the aiding and abetting of abortion services will want to work with legal counsel to assess the risks associated with various benefit designs. Legal counsel can also evaluate ways to structure benefits to reduce those risks. While the Employee Income Retirement & Security Act (ERISA) generally preempts state laws that regulate private employer-sponsored benefits, state criminal laws that are “generally applicable” are not preempted.
In addition, travel benefits offered outside of the employer’s group health plan may not be considered ERISA-covered benefits. Whether a state law criminalizing the aiding and abetting of abortion services is preempted by ERISA will likely depend on how the law is drafted. If it specifically applies to employer-sponsored health benefits, it is more likely to be preempted.
Employers should monitor the state laws as they develop in the states where they operate, including legal challenges to their application of employer and employee benefit plans. For the time being, including the benefits within the employer’s major medical coverage and expanding travel-related benefits to services other than abortion coverage (such as services that can only be obtained from an out-of-state provider) are ways employers can reduce the risk in states with restrictive laws.
Eligibility and Design
Employers seeking to add, expand, or maintain abortion coverage and access benefits should also consider if they want to include such coverage within the current medical insurance coverage. Specific state laws and carrier policies will decide if fully insured employers can add the coverage to their major medical insurance. For example, some states already restrict insurance coverage of abortion in private insurance plans.
Self-funded plans will have more flexibility, but they will be subject to the considerations above. Employers adding benefits to their underlying major medical coverage should work with their carrier and third-party administrator to help design and implement them. Some of the benefits may need to be self-administered by the employer, such as reimbursement for out-of-pocket travel expenses. Employers wishing to extend abortion and/or access benefits to all employees, regardless of whether they are eligible for it, will likely encounter more risks.
Because of the numerous requirements the Affordable Care Act (ACA) imposes on group health plans, employers will need to design the benefits to either (a) meet an exemption to the ACA requirements; or (b) be limited to paying only for non-health benefits, such as travel expenses, so as not to be considered a group health plan.
For example, it may be possible to design an integrated health reimbursement arrangement or employee assistance program to fund certain access benefits, such as travel assistance. Because the laws on this issue are still evolving, employers should be mindful that travel benefits payable solely to obtain an abortion or other health care services could be viewed as a group health plan. This means that they could be subject to various federal laws applicable to those plans, including the ACA.
Additionally, there will be potential tax implications depending on how the employer structures the benefits. Employers should work with their legal counsel and tax advisors to ensure any benefits provided outside the employer’s major medical coverage is appropriately structured to comply with federal benefits and tax laws. As the Biden Administration weighs its options for protecting access to abortion services, it is possible additional regulatory reforms could be proposed to provide employers with greater flexibility.
Coverage Issues
Employers wanting to ensure employees have access to abortion services should also assess what benefits their major medical insurance currently covers and if there are opportunities to improve access to abortion-related services by expanding their prescription drug coverage, telehealth services, or in-network providers.
In addition, employers who offer tax-free accounts, such as health FSAs and health reimbursement arrangements, may wish to review their plan’s definition of qualifying medical care expenses to ensure it is as expansive as federal tax law allows. This could include covering travel expenses for medical care.
Bottom Line
Employers should understand that the laws on these issues will likely continue to evolve for years to come and may shift as administrations change. Employers should consult their legal and tax advisors for the most recent developments.
Susan Freed is an attorney with Dentons Davis Brown in Des Moines, Iowa. You can reach her at susan.freed@dentons.com.