Group Health Plan Considerations Post-Dobbs

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BakerHostetlerKey Takeaways:

  • Group health plan sponsors are wrestling with abortion-related service coverage considerations in the wake of the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization.
  • Each group health plan sponsor will need to consider its own objectives, plan populations and tolerance for risk.
  • Group health plan design and administration will be impacted by federal and state law considerations.

The U.S. Supreme Court’s recent decision in Dobbs v. Jackson Women’s Health Organization has presented many issues for sponsors of group health plans to contemplate as they decide whether and how to proceed with the offering and administration of abortion services.

While each group health plan sponsor will need to consider its own objectives, plan populations and tolerance for risk, the following list identifies factors that sponsors should address before taking any definitive action:

  • Is the plan fully insured or self-insured (or does it have elements of both)? 
    • The ability of a fully insured plan to cover abortion services may depend on the abortion laws of the state out of which the underlying policy is issued. 
    • While self-insured plans generally have more freedom to determine which benefits will be offered, the benefit of Employee Retirement Income Security Act (ERISA) preemption only goes so far and does not extend to the right to cover illegal services. Consequently, particular attention is required with respect to state laws that make the provision of abortion services a criminal act.
  • What scope of abortion services will the plan consider for coverage?
    • Services for the performance of the abortion itself in a state where it is legal?
    • Pre- and post-abortion care in a state where abortion is legal?
    • Travel and lodging expenses incurred to receive an abortion in a state where it is legal?
    • Coverage of abortions performed out of state at in-network benefit levels?
  • Should a sponsor assist employees in obtaining abortion services?
    • Consideration must be given to state laws, including those that may prohibit “aiding and abetting” activities.
  • If a sponsor chooses to cover abortion-related services that were not previously covered, such as travel and lodging expenses, how will that be impacted by existing plan design and legal requirements?
    • How will cost-sharing requirements be applied to expenses such as travel and lodging? 
    • If a sponsor offers to pay travel and lodging expenses for abortion services, how will these services be covered consistent with high-deductible health plan and health savings account (HSA) requirements?
    • How will current IRS limitations on coverage for travel and lodging expenses for medical care be applied and the taxation of amounts in excess of such limitations be addressed?
  • How will abortion services offered outside of a plan affect the plan?
    • Will non-plan abortion services create first-dollar coverage to prevent HSA contribution eligibility?
    • Will non-plan abortion services give rise to a de facto stand-alone group health plan, which would likely create Affordable Care Act and other compliance issues?
  • How will insurance carriers and third-party administrators support the sponsors and plan administrators in recommending design options and administering to a chosen design?
  • What other laws are implicated here?
    • ERISA fiduciary considerations for administering plans in accordance with its terms and applicable law.
    • Internal Revenue Code considerations for the provision of “medical care” in accordance with Code Sections 105 and 106.
    • Mental health parity considerations related to travel and lodging benefits.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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