[co-author: Mitchell Dolman]
As is now well known both in and outside of the legal community, the Supreme Court of the United States recently decided Dobbs v. Jackson Women’s Health Organization, where the Court analyzed a Mississippi law that restricted pre-viability abortions. The Supreme Court upheld the Mississippi statute and overturned the constitutional right to abortion established in the 1973 landmark case, Roe v. Wade. The Court emphasized that the precedent set in Roe and affirmed in Planned Parenthood v. Casey was “egregiously wrong” and amounted to “an abuse of judicial authority.” Declaring that abortion rights should be—and always should have been—governed by the states, not the federal government, that power is now restored through the Court’s decision.
Throughout the Supreme Court’s deliberation period, a number of states set forth potential legislation that would become effective should Roe be overturned. This legislation was designed to either place an immediate ban on abortion or effectuate a “trigger ban” that would lead to outlawing abortion within a certain timeframe. Now that Roe has in fact been overturned, there are currently 13 states that have fully banned abortions or have trigger laws rendering abortions illegal within 30 days of the Dobbs decision. Ten states have blocked abortion bans or are now deciding the issue. The fate of the remaining states’ legal landscape remains uncertain. What is certain, however, is that the patchwork of laws in Dobbs’s wake may impact employers’ decision-making in relation to employee benefits going forward.
Employer Response
As a result of the Dobbs decision, hosts of pro-choice advocating entities have committed to helping employees procure “proper reproductive health.” To name a few, Yelp, Airbnb, DoorDash, Levi Strauss, Microsoft, Netflix, PayPal, Patagonia and Reddit have reportedly all pledged to assist employees secure abortion access. Some businesses stated they would cover travel costs for employees located in restrictive states if the employees traveled to another state to obtain an abortion. Others have or will try to alter benefits or insurance coverage to include travel costs or a reimbursement plan for abortions. Many businesses are still processing the proper path forward by weighing potential financial and legal ramifications if they decide to implement new policies regarding abortions. The scope of proposed additional benefits also remains unclear for some businesses, weighing whether to implement a policy covering all abortions or differentiating between elective and non-elective abortions or varying circumstances, such as sexual assault or incest. Additionally, certain contraceptives and other medications that may be taken to terminate a pregnancy may be implicated in these policies, resulting in a more expensive policy alteration. As more states clarify their stance on abortion legality, businesses will likely garner a better understanding on how to implement policy changes. Businesses with employees in several states may face particular challenges in crafting a policy that complies with all applicable law.
Potential Issues Facing Employers
A plethora of potential consequences face employers seeking to help employees obtain abortion-related healthcare. While not necessarily severe, tax ramifications may exist where an employer inadvertently creates new medical plans by using payroll reimbursement for abortion-related travel expenses. Along with tax ramifications, travel costs such as those already pledged by several large corporations (noting travel benefits of up to $5,000) may become costly. While feasible for larger companies, smaller employers may be financially unable to support similar measures, particularly where the expected coverage is broad and IVF treatments, contraceptives, gender-affirming care, and other medical care may be included with abortion protection. Additionally, for businesses choosing not to implement some form of travel benefit or those that cannot do so for financial reasons, reputational harm could result. During such a divided, volatile social climate, businesses could find themselves choosing between two separate hardships: spending more on medical coverage or choosing not to and potentially dealing with reputational blowback.
Adding to economic hardship, employers could be subjected to both civil and criminal liability in certain states, should they run afoul of applicable law. In states like Texas and Oklahoma, existing legislation empowers citizens to file suit to prevent “aiding and abetting” abortions, which includes paying for or reimbursing the costs of abortion-related care through insurance or otherwise. In some situations, state law allows a reporting individual to file suit to collect damages. This may become a significant issue for employers as views on abortion may differ drastically among employees, so pro-life advocates could become whistleblowers, especially with a financial incentive involved. If an employee can sue another individual under the law, although not a pending threat, they may soon be able to sue corporations that would similarly aid individuals in obtaining an abortion. While enforcement of these laws may be difficult for several reasons including Congress’ right to regulate interstate commerce, businesses are wise to consider the possibilities.
Furthermore, several states have “fetal homicide” laws, which after the Dobbs decision, could confer personhood onto fetuses at any stage during pregnancy. Although most states contain a caveat for dangerous pregnancies and consent situations, the pro-life advocating states could change legislation and prosecute those involved with the procedure for conspiracy to commit fetal murder. Employers looking to aid employees could open the business to criminal liability. These issues remain hypotheticals, but many pro-choice advocates fear these consequences are imminent. Along with pondering these potential scenarios, there are other considerations employers should think about.
Considerations for Employers Moving Forward
A major consideration regarding implementing additional insurance coverage for abortion-related medical care is the applicability of Employee Retirement Income Security Act (“ERISA”). ERISA generally preempts state laws that relate to any employee benefit plans that are “self-insured.” A self-insured plan typically exists when the employer takes on most or all of the benefit costs, sometimes utilizing a “stop loss” cap, which then triggers the insurance company’s aid. A self-insured plan is more typical among larger businesses with 100 or more employees, because risk-spreading is more practical in larger populations. With self-insured plans, there is more flexibility for employers to provide abortion coverage because of ERISA’s preemption power, which would overrule any state law trying to restrict coverage. With a “fully insured” plan, the employer purchases insurance coverage from a company and is only responsible to pay to the premium for its employees to have access to the coverage. This type of policy is more common among smaller employers. Fully insured plans are subject to both ERISA and state insurance laws. The legal questions likely arise when analyzing the distinction between these two plans. Because fully insured plans are subject to state insurance law, the employers utilizing fully insured plans are likely to have a more difficult time implementing packages to include abortion coverage in states where coverage is prohibited. Eleven states thus far have restricted abortion coverage in all private insurance plans written in the state, and these laws likely only apply to fully funded plans. The states that have or plan to ban abortion can likely legally alter their insurance laws to exclude abortion coverage. The remaining question is how these states will try to enforce their insurance laws, especially regarding self-insured plans.
An issue that has already arisen is hospitals’ and healthcare providers’ lack of certainty about whether plans that included abortion coverage are still applicable after the Dobbs decision. While the decision ultimately removed abortion as a constitutional right, this did not inherently affect insurance policies, especially those ERISA protects. There may be changes in the 11 states that have mandatorily excluded abortion from polices, but these changes likely only affect fully insured plans within those respective states. If an employer is within a state that has not altered its insurance laws to exclude abortion, the original plans, whether including or excluding abortion, likely provide the same coverage. However, remaining assiduous with ongoing changes regarding applicable insurance laws is crucial.
The last multi-layered consideration is whether those states that have prohibited abortion will attempt to penalize individuals and businesses for aiding employees to travel across state lines to receive an abortion. The first layer is differentiating between the effect on larger, multi-state businesses, and smaller, local businesses. Multi-state businesses often have self-insured plans, protected by ERISA, and most large insurance companies have nationwide networks that provide reciprocity in coverage for employees in different states. In this scenario, if a large employer with ACME Insurance coverage had an employee travel to another state to access abortion care, it is likely that the ACME Insurance coverage in that respective state would apply. If that coverage applies, then the action covered would likely be subject to that state’s insurance law. Therefore, the only costs the employer would need to consider covering are the travel costs. Smaller, local employers may only have coverage that applies within that state. Therefore, those employers will have to cover both travel and procedural costs if insurance fails to provide relief. The unanswered issue is how abortion-restrictive states will stop employers from encouraging and paying for employees to travel to another state for an abortion.
Justice Kavanagh wrote a concurring opinion in Dobbs, articulating that the decision to overturn Roe will not affect the constitutional right to interstate travel. This concurrence suggests that states may have a difficult time restricting individuals from traveling to another state to receive an abortion. Additionally, the Dormant Commerce Clause prohibits states from implementing legislation that impacts interstate commerce. Pro-choice advocates argue that abortion is clearly a medical service, and therefore state law cannot restrict citizens’ access to procuring that service in other states. As the current laws stand, the right to interstate travel and the Dormant Commerce Clause may stop states from legally restricting abortion access in other states, though we can expect to see post-Dobbs litigation that will formally test Dobbs’sboundaries.
Moving forward, employers wishing to broaden their policies to include abortion-related care or travel benefits should carefully review their insurance and benefits packages to both understand the type of coverage being provided to employees, and to determine whether altering policies is feasible and reasonably risk averse. As part of the deliberation process, employers should also be cognizant of any new or pending legislation that could affect abortion coverage. The Dobbs decision will likely have a lingering effect, and employers should be prepared to stay vigilant for the next several years.
Miles & Stockbridge’s team of employment and benefits lawyers are highly experienced in navigating complex benefits questions. Should you require any assistance with respect to benefits issues in your workplace, please reach out to our labor, employment, benefits, and immigration practice group for further assistance.
Citations for the cases cited within this blog include: Dobbs v. Jackson Women's Health Org., 142 S. Ct. 2228 (2022), Roe v. Wade, 410 U.S. 113 (1973), and Planned Parenthood of Southeastern Pennsylvania v. Casey, 505 U.S. 833 (1992).
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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