Many employers are considering how to respond to the recent ruling overturning Roe v. Wade, which has given states the leeway to outlaw abortion. Employers may have employees who are on either side – or both sides – of the politics of the issue. Employer plans may already exclude abortion services or may cover abortion services. In the latter case, employers may wish to add travel benefits to enable employees who live in states that outlaw the services to travel to obtain an abortion.
Any employer should be very clear as to whether abortion is a covered service under its employer-sponsored health plan at this time. Whether the plan does or does not cover abortion (and other services that may be, or have become, prohibited by states, such as abortion counselling) should be clearly stated in the plan document, and in any employee communication materials. If travel expenses are to be covered, that should also be clearly stated, along with any limitations applicable to such expenses. For example, is there a minimum or maximum number of miles the employee would have to travel to obtain an abortion in order for travel expenses to be covered? Are there dollar limitations on what will be covered?
IRS rules allow a certain amount of travel expenses to be deductible if travel is necessary to obtain medical care. The cap on lodging expenses is $50 per night. If an employer or health plan reimburses those travel expenses, the same cap will apply on the extent to which employer-provided travel expenses can be paid as a tax-free benefit. Consequently, if the employer or plan provides lodging benefits in excess of the cap, it will have to report those extra benefits as taxable wages. There may also be an issue as to whether services that are illegal in one state but legal in another can be paid on a nontaxable basis.
Another issue that could interfere with a plan’s coverage of travel expenses is whether plan deductibles and copayments must apply to HSA-eligible individuals. Unless and until guidance is issued exempting such services from the rules applicable to high deductible health plans, employers should assume that the required deductibles must apply in order for those individuals to remain HSA-eligible.
Many employers are concerned about the possible reach of state laws outlawing the “aiding and abetting” of an abortion, recently enacted in Texas and Oklahoma and under consideration in other anti-abortion states, including Missouri. There are some indications that actions occurring in other states cannot be regulated by the state prohibiting the abortion, but actions within the prohibiting state may be able to be regulated, depending on the facts.
Fully insured plans will generally have to comply with the laws of the states in which the policies are being issued. Self-funded plans will generally have more flexibility so long as the state laws are preempted by ERISA. And there are some undecided issues as to the extent to which ERISA may preempt the state laws. Therefore, there is an unresolved issue as to whether state law penalties can be imposed on an employer paying travel expenses. Texas authorizes “private attorneys general” (any private citizen who decides to bring a case) to sue any party “aiding and abetting” an abortion for up to $10,000, and includes language that encompasses providing insurance. If the employer-provided reimbursement is done from within an ERISA plan, it is very possible that the state laws are preempted by ERISA and thus not enforceable against the ERISA plan or the employer. However, if any state laws make “aiding and abetting” a criminal offense, those laws might not be preempted by ERISA, since ERISA does not normally preempt “generally applicable criminal laws” of a state. There is, however, a question as to whether a prohibition so specific as those involved with abortion are considered to be “generally applicable criminal laws.” (The types of laws normally considered to be generally applicable are those prohibiting a broad range of conduct, such as a general prohibition on embezzlement.) Even if the state laws are ultimately struck down, the employers who become “test cases” may incur a lot of expense and administrative inconvenience, even if they win those cases.
There are many considerations for employers sponsoring group health plans to consider in light of the U.S. Supreme Court’s overturning of Roe v. Wade. Please feel free to contact the authors of this article or the employee benefit practitioner you usually work with to be certain your plan covers the services you want to cover and does so clearly.