United States: Supreme Court ruling on abortion – implications for employer health benefits

Employer Action Code: Act

The U.S. Supreme Court issued its decision in Dobbs v. Jackson Women’s Health Organization and concluded that the U.S. Constitution does not confer a right to abortion, overturning a long-standing precedent established by the court’s decision in Roe v. Wade in 1972. With the decision on how to regulate abortion left to the states, a patchwork of laws is emerging as some states are moving to ban or limit abortion while others are creating additional protections for people who perform or obtain the procedure. It is expected that abortion could be banned or restricted in about half the states. In fact, 13 states had “trigger” laws in place before the ruling, designed to ban or restrict abortion as soon as Roe was overturned. Some of those bans have already gone into effect, while others are likely to take effect in a matter of days or weeks. In addition, both Texas and Oklahoma have already enacted laws that enable private citizens to bring a civil action against a “person” for aiding and abetting an individual in obtaining a prohibited abortion. Additional states may consider adding these laws, and employers should monitor the impact of any such laws (and their response to such laws) with their legal counsel.

Key details

• The scope of coverage for abortion services that employers may provide through a medical plan offered to employees generally will depend on whether the plan is fully insured or self-insured. Fully-insured plans are subject to state insurance law, which may limit coverage for abortion-related services. A number of states currently limit insurance coverage for abortion services, and more states are likely to do the same or impose additional restrictions. Self-insured medical plans that are governed by the Employee Retirement Income Security Act (ERISA) are not subject to state insurance laws and have much greater flexibility in determining coverage for abortion services.
• While ERISA generally preempts state laws to the extent they relate to employer-sponsored benefit plans, there are limits on such preemption. In addition to state laws regulating insurance and those only having an indirect impact on an employee benefit plan, ERISA does not preempt “generally applicable” state criminal laws. It is unclear whether an ERISA preemption argument would survive a legal challenge against non-insurance-related state abortion laws affecting benefit plans, including state civil laws imposing penalties on those who aid and abet abortions in violation of state law. Changes to state civil and criminal laws regarding abortion are likely in the coming months, and legal challenges against them are expected.
• Other regulatory considerations for employers covering abortion-related services under their medical plan could include potential compliance issues under the Affordable Care Act, the Mental Health Parity and Addiction Equity Act, the Health Insurance Portability and Accountability Act on protected health information, and ERISA reporting and disclosure if any provisions of an ERISA-governed group health plan are changed or a new plan is established.

Employer implications

The primary and immediate impact of the Supreme Court’s ruling is on the availability or non-availability of abortion services for women across the U.S., effective as of the date of the ruling, which is itself hugely controversial. For employer health plans, providing coverage for services that are legal in some states and illegal in others will be exceedingly complex, to say the least, and fraught with any number of regulatory, legal, tax, reputational, workforce and social risks. The details noted above represent only a few of the complexities involved. Consultation with legal and tax advisors on the implications of the Dobbs ruling for an employer’s health plan is highly recommended.