Roe v. Wade Overturned - Group Health Plan FAQs

Monday, July 04, 2022

Suzanne D’Amato, Business Contributor

 

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PHOTO: file

As anticipated based on the draft opinion leaked in May, the U.S. Supreme Court, in Dobbs v. Jackson Women’s Health, overturned Roe v. Wade in a 6-3 decision released on June 24th. The Dobbs decision ends the constitutional right to abortion and grants states the ability to set their own restrictions, which means that the group health plan coverage implications will depend on the location of the employer, the location of a participant at the time of service, the plan’s funding mechanism, and the employer’s risk tolerance.

As many as 26 states will now have laws that significantly restrict or ban abortions. The laws vary in their approach; some prohibit physicians from performing abortions, others restrict access to abortion medication, and some impose civil penalties and criminal liability on those who assist in the termination of pregnancy.

The most pressing concern for many employers is whether they can continue offering coverage of abortions through their health plan, including by reimbursing costs incurred by a participant traveling to a state to receive lawful abortion services in that state.

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What Are Trigger Laws and Which States Have Them?

Of the 26 states expected to ban abortion, 13 have laws in place that are designed to be “triggered” and take effect immediately or by quick state action now that Roe has been overturned. Kentucky, Louisiana, and South Dakota have bans that went into effect immediately without further legislative action being required. Idaho, Tennessee, and Texas have bans that will go into effect 30 days after the Dobbs decision without further legislative action being required. Seven states have a trigger ban that will go into effect after the state’s attorney general, governor, or other specified official certifies that the Dobbs decision has eliminated a constitutional right to abortion: Arkansas, Mississippi, Missouri, North Dakota, Oklahoma, Utah, and Wyoming. The certification process is expected to move swiftly in those states.

There are five additional states that don’t have trigger laws but have pre-Roe laws banning or restricting abortion that could now be applied, depending on state legislative action or judicial enforcement: Alabama, Arizona, Michigan, West Virginia, and Wisconsin. It is not expected that all these laws will be actively enforced. The current governor of Michigan, for example, has said she has no intention of enforcing the state’s 1931 law against abortion.

 

Which States Have Protected Abortion Rights?

Sixteen states and the District of Columbia have laws protecting the right to abortion: California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington. Some of those states have codified the right to abortion throughout pregnancy without state interference, while others explicitly permit abortion prior to viability or when necessary to protect the life or health of the pregnant person.

 

Are Employers Required to Cover Abortions?

No. There is no law that requires employer-sponsored group health plans to cover abortion services, although many do. Abortion is not an essential health benefit under the ACA, so even employers with fully-insured plans have broad discretion over whether to cover it.

 

May A Fully Insured Group Health Plan Cover Abortions?

The Dobbs opinion transferred the regulation of abortion rights and services to the states – so fully insured plans need to comply with applicable state law and may not cover abortions in those locations where it is prohibited by law. Because the legality of the procedure will be determined under state law, the corresponding ability to provide coverage under a fully insured group health plan is determined by the laws of the state where the policy is issued.

Six states – Oregon, New York, California, Washington, Illinois, and Maine – require all state-regulated health insurance plans to cover abortions. In 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, copay, and coinsurance.

 

May A Self-Insured Group Health Plan Cover Abortions?

Self-insured plans generally are not subject to state insurance laws, but generally are subject to state criminal and other similar laws. Whether and to what extent ERISA preempts state restrictions on abortion is an issue that will be litigated and may take years to be resolved in the courts.

Moreover, there is no federal case law that addresses ERISA preemption of state laws that attempt to impose criminal liability with respect to benefits offered under an ERISA health plan (such as criminal statutes that would penalize persons who aid and abet abortions). An employer with a self-insured plan that wishes to continue abortion benefits in states with significant restrictions or bans should prepare for potential legal action and consult with counsel to understand and mitigate the potential risks.

 

Can Our Health Plan Provide Travel and Lodging Benefits?

In light of the Dobbs decision, some employers are considering travel and lodging benefits in connection with abortion services and/or other covered medical care that may be hard to access due to state law or policy, while others may expand it to all covered medical services that are not available within a certain radius of an employee’s home.

An employer considering making these benefits available to employees with limited or no access to abortion services in their state should inquire of its medical carrier what options are available. Blue Cross Blue Shield of Massachusetts, for example, has made several reproductive health travel options available to employers in the 50+ market segment, all of which require an affirmative opt-in and the execution of an indemnification agreement.

The addition of these benefits may not be available under a fully insured plan in a state that restricts abortion access. Self-insured plans should check with their TPA to confirm whether the administrator is willing and able to oversee these benefits.

If a travel benefit is added to a group health plan that also provides mental health or substance abuse disorder (MH/SUD) benefits, compliance issues could arise if the travel benefit is not similarly extended to inaccessible MH/SUD care.

 

Other Options for Travel and Lodging Benefits?

Travel and lodging expenses could be reimbursed through an integrated HRA, an FSA, or an HSA. Such coverage may potentially be provided on a tax-free basis under Section 213 of the Internal Revenue Code, which allows travel expenses to be reimbursed on a tax-free basis, so long as the travel is “primarily for and essential to” receiving medical care – but be aware that Section 213 generally excludes amounts expended for illegal operations or treatments. Benefits provided in excess of the Section 213 tax-free limit will result in imputed income to the employee.

Compliance and tax issues can arise when a travel and lodging benefit is offered outside of an employer’s medical plan. An employer taking that approach could unintentionally create another group health plan that would raise numerous compliance obligations.

 

Legal Challenges Ahead?

Employers who provide travel coverage to employees who must leave their home state to get an abortion may have to contend with lawsuits and even potential criminal liability. State lawmakers in Texas, for example, have already threatened Citigroup and Lyft, which announced travel reimbursement policies, with legal repercussions. Texas legislators also outlined a series of abortion-related proposals, including a bill that would bar companies from doing business in Texas if they pay for residents of the state to receive abortions elsewhere.

 

Advice for Employer Plan Sponsors

The treatment of coverage for abortion services under employer-sponsored group health plans – particularly for multi-state employers – is uncertain at this point and will likely remain so for some time. Employers who wish to take action to address the changes in the law should consult with legal counsel to navigate their federal and state compliance obligations, with the understanding that clear guidance regarding the impact of these laws on employer health plans and employment practices may be years away.

 

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Suzanne D’Amato is an employee benefits attorney with 15 years of experience in the field who leads Hilb Group’s national compliance practice.

 

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