Considering the U.S. Supreme Court’s recent decision to send the issue of abortion back to the states, there are various items for employers and plan sponsors to consider around benefit design. One of the most prevalent employer questions is whether options exist to cover travel and lodging expenses associated with obtaining a legal abortion when one has to travel to another state. This outline will provide an overview of the key issues for consideration related to this question.
The Headlines In 1973, the U.S. Supreme Court ruled in the historic Roe v. Wade case that the U.S. Constitution protected a woman’s right to have an abortion. Nearly 50 years later, the high court voted 6-3 to uphold a Mississippi state ban on abortion after 15 weeks of pregnancy and voted 5-4 to explicitly overturn Roe. For background on the June 24 Dobbs abortion decision, view our recent update. Here’s what the ruling did:
Federal protections end: The decision to overturn Roe ends the constitutional protection of abortion rights. However, this decision does not make abortion illegal.
States are now in control: The Dobbs decisions allows states to decide whether to restrict, ban or protect abortion rights within the state. Individuals can seek services in other states that do not restrict access.
Eligibility of expenses is not impacted: Abortion and medical-related travel and lodging expenses remain eligible medical expenses under the Internal Revenue Service Code for federal tax purposes (subject to conditions and limitations). However further guidance is expected regarding the tax-favored status for federal and state purposes if services are not legal in the state in which the abortion is performed.
While Roe was overturned, abortion remains legal in several states, and other reproductive health care services remain protected by law. For up-to-date information from HHS on abortion and access to/coverage of reproductive health care and resources, see this HHS page “Know Your Rights: Reproductive Health Care.”
Understand What the States are Doing States are now solely responsible for setting the laws regarding abortion. Approximately a third of states have laws (or are expected to have laws) that actively protect the rights to abortion. Meanwhile, there are several states that have eliminated (or nearly eliminated) access to abortion. The precise limitations imposed by the state laws vary. See this abortion finder link site that offers up-to-date information about the availability of abortion care across the country. Over the coming weeks, we are expecting to see further state regulation/changes regarding reproductive rights. In evaluating states issues for one’s group benefit plan there are various things to consider:
Are there restrictions on when abortions can occur? Some states may restrict abortion after a set time in the pregnancy (i.e., after 15 weeks) and/or based on certain exceptions.
Are there waiting periods or counseling requirements? Some states require an individual to make multiple visits and review information prior to a procedure.
Is parental consent or notification required for minors? Some states require this consent/notifications.
Are there coverage restrictions? Some fully insured group plans may already limit or do not offer coverage for abortion.
Benefit Implications of State Restrictions How state limitations will affect group health plan coverage and design options will vary depending on whether the plan is fully insured or self-insured. In states where abortion services are banned or limited, employers and plan sponsors should consider how this may impact employees and plan members. In such states, employers and plan sponsors are advised to check with legal counsel to ensure coverage issues don’t run afoul of state laws or otherwise expose the employer to risk exposure concerns.
Insured v. Self-Insured Plan Requirements Health plan coverage is expected to be impacted as states begin to enforce laws or requirements that restrict access to abortion. Insured plans will need to follow state mandates in the state where the policy is issued that may limit or prohibit covering abortions. Self-insured plans can generally ignore state law for plan design purposes and can opt to allow or not allow abortion coverage. Plan documents and communications should clearly identify what is covered and third-party administrators (TPAs) and any stop-loss carrier will also need to be clear on changes to coverage.
Options for States Where Abortion is Illegal There are a variety of ways an employer or plan sponsor can respond to the reversal of Roe. Employers with employees in states where abortion is illegal may consider plan amendments or options that would cover travel and lodging expenses related to out-of-state abortions. One approach is to add travel and lodging benefits to an employer’s existing group health plan (where permitted), but in that case the benefits will be subject to HIPAA, ACA, and Mental Health Parity Act rules. Employers considering travel benefit options under their group health plans must be sure to coordinate with their insurers, TPAs and other service providers. Also, tax favored reimbursement for abortion expenses may be available from a health flexible spending arrangement (FSA) or health savings account (HSA).
There are other potential ways to provide these travel and lodging benefits, although there are many considerations and potential limitations depending on the type of plan (EAP, HDHP, etc.). If abortion-related coverage is not available through the group health plan, an employer could offer a separate self-insured group health plan (such as a health reimbursement account or HRA). We are working extensively with our TPA and vendor partners to confirm whether they are willing and able to offer this type of benefit. Below are a few alternatives that can be considered if this is a plan’s intent:
An integrated HRA may be used to provide employer funding on a tax-advantaged basis for eligible medical expenses. The advantage of an integrated HRA is that employers can set the funding limits, but it can only be offered to those with group health plan coverage.
An excepted benefit HRA is also an employer-funded account on a tax-advantaged basis for eligible medical expenses. While an excepted benefit HRA can be offered to all employees (regardless of health plan coverage), the total available reimbursement is limited ($1,800 per year in 2022).
A specialty post-tax account is an employer-funded account designed to pay for specific items identified by the employer. As a post-tax account, there is increased flexibility in how the program is designed, who can receive the benefit, and how much can be provided.
When considering any of these options, employers and plan sponsors may restrict the types of expenses that are eligible. While travel and lodging expense plans can be designed to only pay abortion and abortion-related travel expenses, employers may want to provide a broader definition of eligible expenses to preserve privacy for employees.
The Future Employees and plan sponsors should be aware what their plans cover today. For example, are abortion services covered? Are prescription drugs related to abortion covered? What is the business, legal, employment and benefit implications of covering or not covering abortions? The near term is fluid as states begin to re-evaluate their positions on the issue. Employers and plan sponsors are advised to be prepared to communicate what their plans cover and why.
As state laws and legal and compliance issues continue to unfold, Conner Strong & Buckelew will share further updates. In the end, coverage issues will be determined by employers/plan sponsors, as allowed by the states, and subject to related requirements and limitations. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.