Plan for a Ban: How the Overruling of Roe v. Wade May Impact Employee Healthcare Plans

Dechert LLP

Dechert LLP

[co-author: Julia Canzoneri]*


The U.S. Supreme Court on June 24, 2022, overruled Roe v. Wade, the seminal case in which the Court had recognized the existence of the constitutional right for individuals to obtain an abortion. In Dobbs v. Jackson Women’s Health Organization, the Court declared that the Constitution does not confer a right to an abortion under Roe’s original determination that an abortion falls within the constitutional right to privacy. The Court further stated that ultimately there can be no constitutional basis for the right to an abortion because that right is not “deeply rooted in the Nation’s history and tradition,” and is not an “essential component of ordered liberty.”

With Roe overruled, abortion rights are again determined on a state-by-state basis. Each of the 50 states will either leave its abortion laws in place as they are, allow the reinstating of the law that was previously in place prior to Roe, reinforce laws that may have been passed during the 50 years in which Roe applied (such as the New York Reproductive Health Act, which essentially codified Roe in 2019), or proceed to pass new legislation with regard to whether and up to what point abortion may be permitted. Some states have so-called “trigger” laws relating to abortion, which generally are laws that automatically took effect upon the overruling of Roe or that will take effect at some specified time thereafter. For employers who may be interested in offering abortion services as part of their employee healthcare plans, the landscape of post-Roe state laws will require such employers to examine the laws of the specific states in which employees work and reside to determine what may be permitted or required of them.

Impact on Employee Healthcare Plans

Employers interested in offering abortion-related services to employees under their employee healthcare plans will need to be cognizant of the laws of the individual states in which employees reside. For example, in New York, Massachusetts, Pennsylvania, and California, abortion is legal for up to 24 weeks of pregnancy without requiring medical justification, and may be accessible after 24 weeks if the pregnant individual’s health or the pregnancy is at risk. Similarly, in Illinois, abortion is permitted up to the point of “fetal viability,” but may be permitted after this point if an abortion is necessary to protect the health and life of the pregnant individual. However, some states’ laws limit abortion to an earlier time during pregnancy. For example, in North Carolina, abortion may be provided without a medical justification for up to 20 weeks of pregnancy.

Certain states have imposed even greater restrictions on abortion access. In 2021, the Texas Heartbeat Act (Senate Bill 8, or “SB8”), went into effect, banning abortion in Texas after six weeks of pregnancy. SB8 also contains language which may be of particular concern to employers considering whether they will offer employees in Texas compensation or reimbursement for abortion-related services after the six-week limitation period on abortions in the state. SB8 states that individuals may bring a civil action against “any person who… knowingly engages in conduct that aids or abets the performance or inducement of an abortion, including paying for or reimbursing the costs of an abortion through insurance or otherwise,” if the abortion violates SB8. At this time, it is not clear whether the “aid and abet” language will apply specifically to employers who seek to reimburse or cover abortion-related services for Texas employees as part of their employee healthcare plans. However, it is now being widely reported that certain Texas state legislators have notified some Texas employers that they are violating the law by paying for out of state abortion costs. In addition, the Texas Supreme Court has recently ruled that a 1925 state law outlawing all abortion and imposing liability on abortion providers may be enforced. It is not clear how the potential implementation of Texas’ pre-Roe law, or the state’s trigger law banning abortion from the moment of fertilization, will impact the state’s implementation of SB8’s “aid and abet” provision. As the practical impact of SB8 develops, employers in Texas and other states that may pass abortion legislation with “aid and abet” provisions will need to remain informed on the application of the law. In addition, while the Employee Retirement Income Security Act of 1974 (“ERISA”) preempts state laws that regulate employee healthcare plans, ERISA generally does not shield employers from criminal liability for violation of state laws.

Impact on Travel

In response to the overruling of Roe, a number of large employers, including Amazon, Walt Disney and Starbucks, have indicated their intent to provide their employees continuing access to abortion services by way of travel reimbursement. However, with few exceptions, the public announcements have provided very few details regarding the amount or scope of the travel reimbursement benefits that will be made available.

Under Section 105(b) of the Internal Revenue Code of 1986 (the “Code”), amounts paid directly or indirectly to reimburse an employee for expenses incurred for “medical care” (as defined in Code Section 213(d)) are not includable in the employee’s gross income. “Medical care” as defined under Code Section 213(d) includes amounts paid for the diagnosis, cure, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. In addition, “medical care” includes amounts paid for transportation “primarily for and essential” to the rendition of medical care. According to the applicable regulations, the value of such transportation will be excludable from income only to the extent the transportation is ordinary and necessary.

Code Section 213(d) also provides that amounts paid for lodging, which is not lavish or extravagant, while away from home primarily for and essential to obtaining medical care will also be treated as amounts paid for medical care. In no event may there be any significant element of personal pleasure, recreation, or vacation related to the travel away from home and the amount may not exceed $50 per night ($100 per night if a companion is also traveling). However, Code Section 213(d) does not provide for any amount of tax-free meal reimbursement.

Historically, in our experience, many companies have provided limited travel benefits under their medical healthcare plans. In most instances, the travel benefit has been limited to unique circumstances (e.g., an organ transplant) where the necessary medical care is not locally available. Adding a travel-reimbursement benefit related to obtaining legal abortion services ordinarily will be a relatively simple amendment. However, at the current time, the consequences of such an amendment, including litigation risk and exposure to criminal charges, render the decision to adopt such an amendment anything but simple.

In an effort to reduce some of the risk associated with adding a travel benefit exclusive to abortion services, many consultants are recommending that employers add a general travel reimbursement program for all medical expenses that are unavailable within a certain specified distance (e.g., 100 miles). In addition, adding a broad-scope travel benefit to an employer healthcare plan could bolster an argument for ERISA preemption of state law.

Potential Implication for Contraception

One of the many lingering questions is how the Court’s decision in Dobbs will impact employees’ access to contraception on a state level, and therefore whether and how employers may offer other reproductive healthcare services as part of employee healthcare plans. In May 2022, the Louisiana state legislature introduced the Abolition of Abortion in Louisiana Act, which defined life as beginning from the moment of fertilization and banned forms of contraception such as intrauterine devices (IUDs), which may prevent fertilized eggs from implanting in the uterus. However, the bill, which also would have imposed criminal homicide charges on individuals who have abortions and banned in vitro fertilization (IVF), was amended by the state legislature. The amended bill no longer includes criminal charges for pregnant individuals who undergo abortions, and also no longer includes language banning IVF or IUDs.

Further concern over the potential banning of contraception on the state level following Dobbs has emerged in Missouri, which has banned all abortion in the state except in cases of medical emergency. Due to ambiguity in the state law, the Saint Luke’s Health System, which operates sixteen hospitals and campuses in the Kansas City area, recently stopped providing emergency contraception (also known as Plan B). However, the office of Missouri Attorney General Eric Schmitt has since clarified that Missouri law does not ban contraception, including Plan B.

While it may be the case that neither Louisiana nor Missouri will imminently be banning forms of contraception such as IUDs or Plan B, it is clear that there is a concern regarding the likelihood that some state legislatures will move forward with attempts to ban certain forms of contraception in the future. Employers who offer access to contraception as part of employee healthcare plans should watch for changes to such state laws. However, employers should also be aware that Griswold v. Connecticut, the case in which the Supreme Court affirmed the existence of a constitutional right to access to contraception without government intervention, has not been overruled. Indeed, in Dobbs, the Court specifically stated that the decision overturns the constitutional right to obtain an abortion “and no other right,” specifically citing Griswold as one of the cases that is not adversely affected by the overruling of Roe.

Practical Advice for Employers

It is critical that employers who wish to provide abortion services as part of their employee healthcare plans carefully monitor changes to abortion and reproductive health laws of the states in which their employees are located. While some states have implemented laws effectively codifying Roe and guaranteeing abortion up to a certain period of time, other states have already begun to implement trigger laws, or laws that went into effect immediately upon the overturning of Roe, banning abortion with little or no exceptions. Employers should remain vigilant with respect to monitoring state law when making decisions regarding whether and how to provide abortion and contraception services to employees, and should be diligent in following the rapidly changing legal situation in states in which the developing law may be increasingly hostile to abortion and reproductive rights.

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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