isolved Blog

The Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization impacts many, including employers who provide health benefits to their workforces.

This month’s Compliance Corner blog offers insight and recommendations for some common questions that employers may have. Find out more by reading the Q&A below:

1.  How does the Dobbs v. Jackson ruling impact employers?

Abortion is a very sensitive topic in our country today. The Dobbs case overruled long-held precedent that limited states’ authorities to regulate abortion rights within their jurisdictions. In Dobbs, the U.S. Supreme Court returned the authority and ability to regulate abortion to the individual states. Employers will begin to see differences among the states in how abortion is handled. Some states will begin to prohibit much of the procedure and other states will move to safeguard it.

Because of this, many employers are wondering what steps they may take to offer group health plan options that continue to support employees in their access to abortion, while also mitigating potential pitfalls under related state restrictions (e.g., privacy laws) and possible civil and criminal penalties.  Employers that wish to adopt benefit enhancements in response to Dobbs now face a complex legal landscape that extends beyond the scope of benefits offered under their group health plans and is likely to be changing in the years ahead.

Beyond the determination of what actions employers can take within their benefits plans to provide access to abortion, employers will want to understand their potential risks in pursuit of such actions, as well as their obligations under other laws that may be impacted. For example, employers should be mindful of the potential impact of anti-discrimination laws, such as the Pregnancy Discrimination Act, which protects employees against discrimination, harassment, and retaliation based on pregnancy, childbirth, and related medical conditions, which may include abortion. The laws enforced by the Equal Employment Opportunity Commission (“EEOC“) and several circuit court decisions indicate that employers cannot fire or refuse positions or promotions to an employee based on their decision (or contemplation of) to have an abortion. It is also important for employers to remember that Title VII of the Civil Rights Act of 1964 extends to religion as well, protecting those from discrimination who may express their religious beliefs on the subject.

2.  How can employers identify if there have been any changes to abortion coverage within the health plans offered to their workforce? 

The first step for employers is to determine whether or not their group health plans are fully insured or self-insured, as states are able to regulate the terms of fully insured plans, while self-insured plans allow for more employer discretion. Therefore, it is advisable for employers to work with their health plan carriers, brokers, and legal counsel; as well as review plan documents and governing state laws to determine the best course of action.

Employers with group health plans may consider establishing a Health Reimbursement Arrangement (“HRA”) that includes lawful abortion as medical care under Section 213(d) of the Internal Revenue Code (“Section 213(d)”), or establishing taxable reimbursement arrangements (discussed below in #3).

3.  Can employers reimburse employees for abortion services through an HRA?

Under Section 213 (d), IRS allows for the reimbursement of medical expenses, including lawful abortion-related expenses, not reimbursed through another group health plan. A common question that has come up is whether employers can narrowly tailor their HRA to solely cover the reimbursement of abortion-related medical expenses or medical travel expenses. It is important to note that narrowly tailoring plans to cover only abortion-related expenses could violate other laws, including the Mental Health Parity and Addiction Equity Act, which generally restricts plans from putting stricter limits on mental health and substance abuse treatments than other medical benefits.

One option for those looking to cover reproductive medical travel expenses, is to offer an HRA that broadly provides for medical related travel expenses. Such a plan would not be restrictive to abortion or reproductive travel, but any eligible medical travel expense. This would include for mental health or any other medical service that required travel and met the IRS rules related to such travel, as outlined in publication 502.

Alternatively, employers could explore adopting taxable reimbursement arrangements for any travel or lodging expense incurred by employees that are not necessarily tied to any medical care but designed as wellness-related expenses. Because the arrangements would not be tied to any group health benefit requirement or group health plan, the broad design would allow the wellness benefits to exist outside of the requirements of ERISA or the Patient Protection and Affordable Care Act (“ACA”) and may also protect the employer from potential criminal and civil liability under state-specific laws. It is critical, however, for employers to ensure the design is broad enough that the employer does not inadvertently tie the reimbursement to a Section 213(d) expense, but rather to a dollar limit related to travel and lodging.

4.  Can employers reimburse travel expenses for employees going out of state to seek abortion services? And if yes, what expenses would be permissible? 

In general, many medical plans cover travel and lodging expenses where out-of-state treatments are medically necessary and otherwise meet IRS requirements. Although there is no clear answer at this point, it appears the general right to interstate commerce and travel provides some assurance that covering travel to another state to obtain a lawful medical procedure (which may include abortion) may be permissible under applicable law. Keep in mind, although interstate commerce and travel is legally protected, some states have announced intentions to restrict residents from traveling to other states for the purpose of obtaining an abortion, and until such laws are contested and legal precedent is set, whether or not they will be upheld remains to be seen. You should discuss your plan’s options with your legal advisor.

5.  Is coverage for reproductive-related medications impacted by the Supreme Court’s decision in Dobbs?

Dobbs did not expressly restrict contraceptive access. That being said, there are currently 12 states that allow some pharmacists and health care providers to refuse contraceptive services to patients based on religious or moral obligations. As of now, however, there is no state in which contraception is completely inaccessible. Additionally, at this time there are no state restrictions on “Plan B” drugs, which are designed to be used after sex to prevent a pregnancy from occurring. There is a distinction between Plan B drugs and abortion facilitating drugs. Employers will need to talk with their legal counsel and plan advisers to decide if it is prudent to continue or stop covering medication for abortions in states that ban or put restrictions in place.

6.  How can employers stay up to date on changing reproductive laws? 

Employers should continue to monitor the abortion laws in each state in which they have employees and dependents covered under their plans, while also working with their legal and group health plan advisers and carriers to determine what is covered, as well as how to implement options to meet the objectives of their companies while complying with state laws.

7.  How should employers address abortion coverage updates with their employees/what are best practices for communication of controversial benefit changes? 

Plan documents must continue to include plan rules and plan changes. Employers should be mindful of this highly sensitive issue and be cognizant of their employees' needs while also being upfront and honest about the coverage in the plan.

8.  What issues should multi-state employers consider?

As the ruling takes effect and the states begin to govern the issue of abortion, employers need to be aware of changes to applicable law. Many employers have a footprint in states that restrict access to abortion and other states where abortion will be allowed.  Employers will have to continue to monitor the abortion laws in each state as it remains to be seen what each state will enact and how aggressively they will be able to enforce such laws.

* This blog is not legal advice. Please seek proper legal advice.

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