Employers Prepare Benefits Responses After Abortion Ruling
Many employers are prepared to revisit employee benefits and leave policies in the wake the U.S. Supreme Court's June 24 ruling that overturned Roe v. Wade and let individual states allow or restrict abortion access. See the June 2022 SHRM Online article Employers Providing Abortion Benefits Should Address Compliance Questions.
With the news that the U.S. Supreme Court may overturn Roe v. Wade, the 1973 decision that legalized abortion throughout the U.S., some employers have begun revising their health benefits to cover travel expenses for out-of-state medical procedures, including abortions, that are not available locally.
In states such as Texas, where a new state law bans most abortions after about six weeks and allows private citizens to sue anyone (in Texas or elsewhere) who "aids or abets" a prohibited abortion, "we are likely to see litigation of this issue" of employers reimbursing abortion travel and providing related benefits, said Meredith Kirshenbaum, a principal in the Chicago office of law firm Goldberg Kohn.
"It is unclear whether a court would or could find that an abortion performed in another state legally violates Texas's anti-abortion law, but I suspect we will see someone bring that suit," she said. "I also suspect we'll see states push the limits in drafting private right of action provisions to address abortions performed across state lines."
Update: In his concurring opinion to the Supreme Court's ruling in Dobbs v. Jackson Women's Health Organization, Justice Brett Kavanaugh wrote that "some of the other abortion-related legal questions raised by today's [June 24, 2022] decision are not especially difficult as a constitutional matter. For example, may a State bar a resident of that State from traveling to another State to obtain an abortion? In my view, the answer is no based on the constitutional right to interstate travel."
Medication-induced abortions represent a growing percentage of all abortions, currently 54 percent, according to research by the Guttmacher Institute.
For employers, however, "rather than covering the cost of travel to a state where abortion can be performed legally, there may be more risk to [covering] abortion-inducing medication in certain states, because that may more clearly be aiding and abetting an abortion in violation of the state's law," Kirshenbaum said. "It will depend on the scope of the state law and whether it extends to abortion-inducing medications."
Reach of State Laws
A May alert by national law firm Morgan Lewis, headquartered in Philadelphia, pointed to issues in two legal doctrines that will affect liability risks for employers providing abortion benefits.
Extraterritorial application of state abortion statutes
In states like Texas that bar people and groups from aiding and abetting the procurement of illegal abortions, "there will be a question as to whether those laws apply to out-of-state events," Morgan Lewis advised. Even if aiding and abetting isn't specifically prohibited under new abortion statutes, states that criminalize abortion may already have laws "generally barring entities from conspiring to violate criminal laws or aiding and abetting the commission of a crime."
Those laws might arguably be used to prosecute a company "if it reimburses a Texas-based employee for an abortion received in a state that permits abortion, or for related travel costs," the alert said.
The attorneys at Morgan Lewis went on to note, however, that there is a general presumption against applying a specific state law beyond that particular state, or "extraterritorial application of state law." There could also be constitutional concerns raised, they said, if Texas, for instance, tried to prosecute an employer for providing access to an abortion in California. "This issue will likely be the subject of continuing litigation and debate," the attorneys said.
Self-funded health plans are governed by the Employee Retirement Income Security Act (ERISA), which pre-empts state laws and regulations that apply to medical benefit plan administrators.
To the extent a self-funded employer reimburses medical, surgical and travel costs associated with procuring a legal abortion through the employer's primary group health plan or another benefit plan subject to the ERISA, such as health reimbursement arrangements, "the employer arguably has an added layer of protection against any potential criminal or civil cause of action brought under state law through ERISA's broad preemption provisions," the Morgan Lewis alert said.
"Arguably any criminal or civil action brought against the employer for 'aiding and abetting' and/or intending to 'aid and abet' an abortion performed in compliance with the laws of the state in which the abortion is performed should be removed or dismissed, purely on ERISA procedural grounds," the alert said.
Nevertheless, Morgan Lewis advised, companies should ensure that any abortion benefit offered under their employer-sponsored ERISA plans is "in compliance with the laws of the state in which the medical services are rendered."
State Laws Vary Widely
Insurance coverage of abortion was not mandated or banned under the Affordable Care Act (ACA). However, states have passed their own rules and regulations regarding abortion coverage, and those rules vary widely.
"States were taking their own steps to regulate health insurance coverage of abortion long before the current lawsuit that could overturn Roe v. Wade," said Louise Norris, an analyst at healthinsurance.org, a website for health care consumers. The 25 states that ban or restrict coverage of abortion by health plans offered through ACA health insurance exchanges are most likely to restrict abortions under all health plans if Roe is overturned, she said.
On the other hand, six states—Oregon, New York, California, Washington, Illinois, and Maine—require all state-regulated health insurance plans to cover abortions. In three of those states–Oregon, New York, and Illinois–the health plan must fully cover the cost, while health plans in the other three states can require the member to pay their normal deductible, co-pays and co-insurance.
Kirshenbaum said she doesn't see federal issues involved with employers providing abortion-related services but that "it's possible there could be in the future with the introduction of legislation that proposes to penalize employers who take stances that stand in conflict with their state laws."
She added, "If there were to ever be federal law enacted restricting access to abortion—which seems unlikely at this juncture—then of course, there could be potential federal liability as well," if such a law was upheld as constitutional.
Title VII of the 1964 Civil Rights Act "protects women from being fired for having an abortion or contemplating having an abortion," according to the U.S. Equal Employment Opportunity Commission. Whether this federal protection against discrimination might be invoked as a defense in cases involving state anti-abortion laws could be the subject of future litigation.
Abortion-related travel coverage "may potentially be provided on a tax-free basis so long as travel is 'primarily for and essential to' receiving medical care," advised attorneys Danita N. Merlau and Benjamin J. Conley, partners in the Chicago office of Seyfarth. "In limited circumstances, and subject to restrictions on the amount of reimbursement, tax-free coverage might be able to be provided for lodging, meals, and for parents traveling with a child," they noted.
However, Merlau and Conley added, "notwithstanding the foregoing, employers should be aware that [the Internal Revenue Code, which defines what benefits may be provided on a tax-free basis] generally excludes amounts expended for illegal operations or treatments. For these purposes, the IRS usually looks to the laws in effect where a service was received or procured."
Regarding employees enrolled in high-deductible health plans, "depending on how an employer's travel benefit is structured, employers may want to require that employees [satisfy their plan deductible] prior to receiving reimbursement for travel costs relating to abortion services," so employees maintain their eligibility to contribute to a health savings account, Merlau and Conley advised, adding that "more guidance from the IRS on this issue would be welcome."
New York City-based law firm Davis & Gilbert advised plan sponsors and administrators to:
- Review plan documents to assess current coverage and discuss potential coverage options with ERISA counsel and with vendors (including insurers, stop-loss carriers and administrators, as applicable), and monitor future developments.
- Consult ERISA counsel about the applicability of relevant state laws, the availability of ERISA preemption, and the unique risks and opportunities that their plans may face.
"Each plan's situation will depend on its particular facts and circumstances, including the state law at hand," the firm recommended.
Employers should keep watch for state law changes. For example, several members of the Texas state House of Representatives said they'll introduce bills in the coming legislative session that would bar corporations from doing business in Texas if they pay for abortions in states where the procedure is legal, the (Texas) Herald Democrat reported.
Related SHRM Articles:
Employers Providing Abortion Benefits Should Address Compliance Questions, SHRM Online, June 2022
Employers Likely to Revisit Abortion Coverage, Other Benefits, with Roe Overturned, SHRM Online, updated June 2022
Employers Prepare Benefits and Policy Responses to Abortion Ruling, SHRM Survey Finds, SHRM Online, June 2022