The Impact of Overturning Roe v. Wade on ERISA Benefit Plans

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In late June 2022, the Supreme Court of the United States decided Dobbs v. Jackson Women’s Health Organization, overruling Roe v. Wade and Planned Parenthood v. Casey, which had previously recognized a woman’s constitutional right to terminate a pregnancy prior to fetal viability. After Dobbs, many states sought to protect a woman’s choice to terminate her pregnancy. Other states, however, had laws that automatically went into effect to restrict or ban abortions within their jurisdiction or, like West Virginia, began debating whether and to what extent to restrict or ban abortions.

For employers who offer reproductive health benefits through their employee benefit plans, laws restricting abortion raise questions about health care coverage and whether employers must make changes to their benefit plans to ensure continued access and compliance with the law in the different jurisdictions where they may operate. The top three questions we have heard (and answered) include:

QUESTION: My business operates in a state that plans to ban abortions. If enacted, how would such a law affect coverage under my employee benefit plan for reproductive health benefits?

ANSWER: It depends on whether you offer fully-insured or self-insured health care benefits. If you are fully-insured (i.e., you and employees pay premiums to an insurer who then pays claims under the policy), an insurer licensed by a state that bans abortions could not provide covered abortion services within that state. Depending on the extent of in-network providers or out-of-network services under the plan, the insurer may provide covered abortion services within a state that has not banned abortions.

If you are self-insured, you can continue to provide covered abortion services regardless of whether the state’s insurance law bans insurance coverage for abortion services. Self-funded health care benefit plans are governed by ERISA, which contains a provision preempting any state law that relates to an employee benefit plan. It is currently unclear whether ERISA preempts state laws that attempt to impose criminal liability concerning benefits provided under an ERISA health plan. For example, if a state law penalizes a person who aids and abets abortions, it is unclear whether ERISA would preempt that law to allow a self-insured employer to provide coverage for abortion services without the risk of liability. And, the practical ability of employees to access those services within a state that banned abortions may be limited, which raises the question of whether you may cover travel costs.

QUESTION: My state has banned abortions, but I want to offer travel benefits to employees who wish to travel to another state to seek reproductive health benefits. Can I offer these travel benefits under my current health plan or a separate policy?

ANSWER: Yes. Under IRS rules, legally obtained abortion services are medical care and would be payable as medical expenses under an employer’s health plan. There are, however, limits depending on whether the expenses are for travel, lodging, or meals. Travel expenses “primarily for, and essential to, medical care . . . [including] bus . . . train, or plane fares [and] transportation expenses of a parent who must go with a child who needs medical care” are medical expenses. Lodging expenses eligible for reimbursement are more limited: the IRS rules state that the taxpayer can only include “up to $50 for each night for each person.” Expenses for meals purchased while traveling are not eligible for reimbursement.

Self-funded employers can work with their third party administrator (“TPAs”) on whether and to what extent its plan will administer any travel benefits, including whether to cover travel for a broader range of covered medical services not available locally.

Employers offering fully-insured coverage must determine if travel benefits are available under those plans. If not, fully-insured employers who do not provide coverage under a high deductible health plan may consider establishing a health reimbursement arrangement ("HRA") or excepted benefit HRA ("EBHRA") that will reimburse eligible travel and lodging expenses for a trip that is primarily for, and essential to, receiving medical services. If the employer is using an EBHRA for reimbursement of these combined expenses, however, there is a total cap of $1,800 for all covered expenses. Employers cannot make $1,800 available to reimburse abortion expenses under one EBHRA and make an additional $1,800 available under another EBHRA to reimburse travel and lodging expenses.

An employer also can offer travel benefits as a separate policy outside of any self-insured or fully-insured health plan, but such a decision carries risk because the employer would lose ERISA’s protection from most state laws. If a state law imposes liability for aiding or abetting the termination of a pregnancy, an employer’s voluntary policy that reimburses employees for travel expenses may violate state law. Moreover, because a policy that reimburses employees for travel expenses outside of a health plan means the employee must work directly with the employer to take advantage of the policy, an employer must also navigate and balance employees’ legitimate privacy concerns.

QUESTION: My employees are unionized. If I want to change my health benefit plan to ensure continued access to reproductive health benefits, do I have to bargain with the union?

ANSWER: The first place to start in determining any bargaining obligations is the collective bargaining agreement (“CBA”). Many CBAs require an employer to maintain the same medical plan provisions as in the previous agreement. Some agreements only permit an employer to change coverage if the changes do not result in a reduction or loss of benefits. If there is language limiting an employer’s right to change the substantive medical coverages (e.g., no material or significant reductions), employers should consult with legal counsel on the impact that language has on changes to health plans that cover abortion-related services. If there is no language explicitly allowing the employer sole discretion to change medical coverages or it is ambiguous, you should consult with counsel before deciding whether to make any changes to health benefits for your unionized employees.

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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