Supreme Court overturns Roe v. Wade: Q&As for employer plan sponsors

The U.S. Supreme Court issued its decision in Dobbs v. Jackson Women’s Health Organization, concluding that the U.S. Constitution does not grant a right to abortion. This decision overturns Roe v. Wade and Planned Parenthood of Southeastern Pa. v. Casey, leaving it to the states to decide on abortion issues.

Employer group health plan sponsors should discuss with legal counsel how this decision impacts their workforces and their employee health benefits, and continue to monitor developments in the states in which they do business. The following Q&A addresses some key issues.

Q. The U.S. Supreme Court overturned Roe v. Wade. What happens now?

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.

Before the ruling, 13 states had “trigger” laws in place, 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 within days or weeks. The Guttmacher Institute is tracking the various state laws via an interactive map that can be found here.

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 could consider adding these laws as well. Employers should work with legal counsel to monitor and appropriately respond to such laws.

Finally, some states have enacted or are considering laws to make it illegal to travel across state lines for an abortion as well as to receive abortion-inducing pills by mail or via telemedicine. Other states could consider criminal penalties for violations of their abortion laws.

ERISA self-insured plans might be able to argue that ERISA preempts certain state civil and insurance laws; however, it is more unlikely that ERISA will preempt state criminal laws. For ERISA-covered plans, this is likely to be tested in the courts in the coming months.

Q. My company has decided to provide coverage for abortion services, including travel expenses, under our medical plan. Are there any compliance concerns for doing so?

The answer depends on whether the medical plan is fully insured or self-funded. Fully insured plans are subject to state insurance laws, which may limit coverage for abortion-related services. A number of states currently limit insurance coverage for abortion services (and more are likely to do so or impose additional restrictions), and state laws regulating insurance are not preempted by ERISA for fully insured plans. Self-funded medical plans that are governed by ERISA, however, are not subject to state insurance laws and have much greater flexibility in determining how abortion services are covered.

ERISA generally preempts state laws on issues related to an employer-sponsored benefit plan; however, it does not preempt “generally applicable” state criminal laws. It is unclear whether ERISA would preempt state abortion laws that are not insurance-related, 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. How these laws apply to employer-sponsored group health plans should be discussed with legal counsel.

In addition to the issues discussed above, employers providing abortion-related services under their medical plans should consider the following:

• Mental health parity. The Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits imposing more stringent limitations on mental health and substance use disorder (MH/SUD) benefits than on medical/surgical benefits. If a travel benefit for medical care is integrated with a group health plan that also provides MH/SUD benefits, compliance issues could arise if the travel benefit is not extended to MH/SUD care. For example, if travel benefits are provided under a group health plan for abortion-related care because of accessibility issues, legal counsel should be consulted to determine whether a plan that does not provide similar travel benefits for MH/SUD-related care when there are accessibility issues remains in compliance under MHPAEA.
• HSA compliance. Generally, an employee enrolled in a high-deductible health plan (HDHP) cannot contribute to a health savings account (HSA) if that HDHP or any other health plan under which the individual is covered reimburses all or part of the cost of medical services before the individual satisfies the minimum HDHP deductible; however, preventive services may be reimbursed by an HDHP before the deductible is satisfied. Currently, abortion services and related travel expenses do not appear to be a preventive service for HSA eligibility purposes. As with other non-preventive services, for those participants to be able to make and receive HSA contributions, an HDHP should require participants to meet the plan’s deductible before being reimbursed for travel costs relating to abortion services.
• HIPAA privacy protections. Benefits offered through a group health plan are protected by the Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules. Under HIPAA, covered entities (e.g., group health plans, healthcare providers, insurers and third-party administrators) cannot disclose protected health information (PHI) without a patient’s consent. This rule applies to all covered entities (and their “business associates”) that transmit health records electronically but not to entities that do not bill for insurance; however, HIPAA doesn’t protect PHI in all instances. For example, PHI may be disclosed to law enforcement upon request in certain situations — such as in response to a court order or a warrant — and when it’s required by law for public health surveillance. It is unclear how these law enforcement and public health surveillance exceptions in HIPAA may come into play post Roe v. Wade. Legal counsel should be consulted.
• ERISA reporting and disclosure. As a reminder, if any provisions of an ERISA-governed group health plan are changed or a new plan is established, all of ERISA’s reporting and disclosure requirements will need to be satisfied, including maintaining a plan document and summary plan description and filing a Form 5500.

Q. My medical plan covers travel expenses for abortion-related services for those enrolled in the plan. Are those benefits taxable to my employees?

The taxability of medical benefits depends on whether the service is considered medical care under the Internal Revenue Code. If it is considered medical care, it is excluded from an employee’s gross income under the code. Travel to access abortion services constitutes medical care if the travel is principally to obtain a legal abortion by a licensed provider.

IRS Publication 502 explains what a reimbursable or tax-deductible medical expense is. The publication includes sections on items such as transplants, lodging and transportation, but there are limitations. Specifically, lodging expenses may be provided on a tax-favored basis with a limit of no more than $50 per person, per night. With respect to transportation expenses, there is no hard dollar limit, but there are limits on who can be included in the travel (i.e., parent of a child or nurse/person who can give injections, medications and treatment). To the extent the plan provides for benefits in excess of these limits (e.g., covers lodging benefits at $250 per person, per night), then the amounts above the limit would be taxable to the participant.

This also means that these travel expenses (up to any applicable limits) can be reimbursed via an HSA, health reimbursement arrangement (HRA) or health flexible spending account (assuming they are not reimbursed via the medical plan).

Q. My company has decided to provide coverage for abortion-related travel expenses for all my employees, including those who are not enrolled in the medical plan. Are there any compliance concerns with this approach?

As discussed above, travel to access abortion services constitutes medical care. As a result, providing abortion-related travel benefits to individuals who are not enrolled in your group health plan may create a new group health plan. Employers should carefully structure any such program to make sure it complies with applicable federal law, including the ACA’s insurance market reforms, HIPAA and COBRA. Employers may consider an integrated HRA, an excepted benefits HRA or an employee assistance program that qualifies as an “excepted benefit” (all of which would be ERISA-covered plans). In addition, employers with HSA-qualifying HDHPs should be aware that covering abortion-related travel benefits on a first-dollar basis may impact an employee’s ability to contribute to his or her HSA. Employers considering this approach should discuss the potential compliance issues with their legal counsel.