On June 24, 2022, the United States Supreme Court issued the Dobbs v. Jackson Women’s Health Organization decision, overturning two key precedents—Roe v. Wade and Planned Parenthood v. Casey—both of which established and upheld the constitutional right to an abortion. Dobbs essentially holds that there is no right to abortion in the United States Constitution and thereby awards states largely unfettered authority to regulate abortions. In light of this, Dobbs poses a unique set of challenges for employers, most notably in travel benefits and related reimbursements area, as regulations on abortion vary greatly from state to state.
General Considerations for Employers Seeking to Reimburse Employees for Travel Expenses for Abortion-Related Services
In the wake of the Dobbs decision, many employers with employees in states that have restricted/prohibited abortion services have (i) implemented, (ii) expanded, or (iii) are looking to implement or expand their travel reimbursement benefits for medical services to cover travel and lodging expenses for employees who may choose to seek out-of-state reproductive and abortion-related services. Employers who are currently providing or contemplating providing reimbursement benefits to their employees should consider the following:
- What State You’re in Matters: States like California, Nevada, Oregon, Washington, New Mexico, Colorado, Illinois, Minnesota, Maine, New York, Pennsylvania, Virginia, North Carolina, Vermont, Massachusetts, Connecticut, D.C., New Jersey, Maryland, Delaware, and Rhode Island have maintained the right to an abortion. Many of these states, most notably California, are working to expand access to the procedure by requiring insurance to pay for it. Employers with operations that are contained entirely within one or more of these states are less likely to feel the impact of the Dobbs decision in relation to the medical/benefits plans they offer their employees.
- Health Insurance Portability and Accountability Act (“HIPAA”) Considerations: Some employers may seek substantiation from employees regarding expenses for tax purposes or other reasons. Where employers offer travel/reimbursement as a benefit outside of a health plan, such as an ERISA covered plan, soliciting medical information as substantiation for travel could create a situation where that information is regarded as outside the scope of HIPAA. For instance, retaining a third party vendor to process reimbursements, where employees essentially book their own travel and lodge receipts with vendors carries the risk of a court regarding potential medically identifiable information attached to such receipts as being outside of HIPAA’s protections. Therefore, it is critical that employers contemplating reimbursement in connection with abortion related travel offer this benefit in a manner that integrates the benefit within a health plan.
- Potential civil/criminal liability: Dobbs has squarely placed courts at the center of inter-jurisdictional abortion wars. A looming issue now is what will occur when a resident in a state like Texas, which bans abortion, goes to a state like California, where abortion is legal. Since Dobbs, some states have already imposed “trigger laws” imposing restrictions or complete bans on abortion. Others, such as Texas and Oklahoma, have enacted additional laws criminalizing abortion. Importantly, some of these laws explicitly state that providing coverage or reimbursement of abortion expenses is considered “aiding and abetting” abortion. Moreover, states like Missouri and, recently, Texas, are considering statutory amendments that expressly prohibit (and attach criminal penalties) where employers aid or incentivize out of state travel for abortions. Such potential measures call into question whether employers in such states should implement travel reimbursement policies in connection with out of state abortions at all. The state of the current law in states prohibiting or otherwise restricting abortions is currently evolving, so employers are advised to keep track of latest developments in the respective states in which they operate.
- Employment Retirement Income Security Act (“ERISA”) Preemption Issues: Certain employers have traditionally relied on the federal laws that govern employer-sponsored health plans, including ERISA, to preempt state laws that attempt to regulate employer-sponsored benefit plans. However, there are several important exceptions that can undermine ERISA preemption of state law. For instance, one exception to ERISA preemption of state law concerns “generally applicable” criminal laws. Presently, there is no clear federal case law that deals with ERISA preemption of state laws that attempt to impose criminal liability with respect to benefits provided under an ERISA health plan (such as criminal statutes that would penalize persons who aid and abet abortions). Therefore, even if employers have self-funded insurance plans subject to ERISA, the ERISA preemption has important limits. In light of the uncertainty concerning the various state laws as well as the uncertain application of ERISA, cautious employers may prefer not to rely on ERISA as their defense against potential claims.
Designing Travel Reimbursement Benefits
Employers looking to provide travel reimbursement benefits to their employees can do so in a variety of ways. Below we summarize a few options, related risks, and other considerations for employers looking to do so.
Option 1: Expand Group Health Plan Benefits
Employers may expand their existing group health benefits to include reimbursement for travel required to access certain medical services. Although this is the simplest and most straightforward approach, it is an option that is really only available to self-insured employers. Self-insured employers have more flexibility including having control over the types and levels of benefits covered under the plan, so long as it is consistent with existing federal requirements. Fully insured employers, on the other hand, are at the mercy of their carriers as to coverage.
Many self-insured employers have health plans that already cover abortion services (although these services, like many others, may not be specifically mentioned in plan documents or summary plan descriptions). Many of these plans also reimburse travel expenses, in certain situations, for covered medical services. Since Dobbs, self-insured employers have either: (1) explicitly expanded their reimbursement benefit program to include reproductive and abortion-related services; or (2) expanded their program to cover all circumstances where an employee would be unable to receive covered medical services due to restrictions or limitations under state law, or due to network or provider access issues.
Employers looking to expand their travel reimbursement benefits should consider all of the considerations notes in the section above.
Option 2: Health Reimbursement Arrangement
Fully insured employers may reimburse their employees through an integrated health reimbursement arrangement (HRA). An integrated HRA is an employer-funded group health plan from which employees enrolled in the employer’s traditional group medical insurance plan are reimbursed for qualifying expenses not paid by the traditional plan (an option also available to self-insured employers).
Fully insured employers should keep in mind, however, this approach would exclude from eligibility any employees who, for any reason, did not elect coverage and/or who are not benefits-eligible (i.e., part-time employees, interns). An intermediate approach is to offer an excepted benefit HRA to all benefits-eligible employees, regardless if they are enrolled in the plan. Employers considering this option should keep in mind that employers are limited in how much they may make available under the HRA for a year ($1,800 in 2022, which may be increased for cost-of-living adjustments in future years).
Option 3: Stand-Alone Travel Reimbursement Program
Another option for employers to create a standalone reimbursement program entirely outside of any established group health plan. This approach affords companies greater flexibility in setting eligibility, scope, and coverage parameters. It also offers employers the ability to cover reasonable expenses of an accompanying companion, if they so desire.
A standalone reimbursement program may result in taxable compensation for employees who receive such reimbursements. Employers would need to be sensitive to privacy and confidentiality considerations. Additionally, employers must consider the potential penalties for noncompliance with the Affordable Care Act (ACA) requirements for group health plans (e.g., the requirement to cover recommended preventive services without cost and not imposing any annual dollar limits on available benefits).
What Should Employers Do Now?
- As noted, Dobbs has initiated a flurry of statutory changes in various states that currently prohibit or limit abortions. Employers are advised to continue monitoring developments with respect to criminal and civil liability related to employer-sponsored medical travel for abortions in the states within which they operate. Employers should continue to check in with experienced employment counsel over the next few months to ensure that their policies are aligned with changing legal mandates.
- Employers in states like Texas and Missouri, which are currently considering statutory amendments that expressly prohibit and attach criminal penalties if employers aid or incentivize out of state travel for abortions should specifically discuss with counsel whether they should continue with or otherwise amend policies offering employer reimbursements for abortion related travel.
- Finally, employers looking to understand HIPAA related considerations and/or the applicability or exceptions to ERISA covered plans are encouraged to contact experienced legal counsel to discuss the above referenced issues further.
If you have questions regarding this topic or any other issue related to employment law, please contact one of our attorneys:
|Eric C. Bellafronto||Ernest M. Malaspina||Sean Bothamley|
|Karin M. Cogbill||Richard M. Noack||Shirley Jackson|
|Jennifer Coleman||Daniel F. Pyne III||Michael Manoukian|