Employee benefit plans in Post-Roe World: Avoiding Criminal Liability

By Christine M. Zinter
Bullard Law,

As has been widely reported, the Supreme Court released its opinion in Dobbs v. Jackson Women’s Health Organization on Friday, June 24, overturning the Court’s 1973 decision in Roe v. Wade which held the United States Constitution prohibits states from banning abortion or unduly burdening access to abortion services in the initial phases of pregnancy. This Court decision effectively sends back to each individual state the power to regulate abortion. Most states already have laws relating to abortion, either banning, restricting, or guaranteeing access to abortion services.

Oregon and Washington employers with no out-of-state employees will not likely experience any change to benefit plans because both Oregon and Washington have state laws guaranteeing access to abortion services. But employers with a wider regional or national footprint may find themselves faced with questions from employees regarding access to abortion services. In the following, we discuss several options for employee benefit plans and the risks associated with each plan of action.

With the Supreme Court’s overturning of Roe v. Wade, abortion has already or will likely become illegal in approximately half the country. Some employers may want to consider their employee benefits plans to meet their employees’ new healthcare needs or demands. However, the adoption of new benefits can result in inadvertent compliance issues that employers should carefully consider before taking action.

Overview of State Laws

At least 24 states have laws that can now be enforced banning abortion or imposing additional restrictions and conditions upon the procedure, including 13 states with “trigger laws” (AR, ID, KY, LA, MS, MO, ND, OK, SD, TN, TX, UT, WY) that criminalize abortion now that Roe is overturned. Political experts estimate that when the dust settles, 26 states in total will either significantly restrict or ban abortions entirely within their jurisdictions. These laws will vary, from prohibiting physicians from performing the services, to restricting access to abortifacient medications, to attaching civil penalties and criminal liability to those who “aid and abet” in the termination of pregnancy. Almost all states are expected to make exceptions for life-threatening pregnancies, though few state prohibitions include exceptions for rape or incest. Conversely, sixteen states and the District of Columbia have laws that guarantee the right to abortion: CA, CO, CT, DE, DC, HI, IL, ME, MD, MA, NV, NJ, NY, OR, RI, VT, WA.

States Imposing Criminal Liability for Employers Covering Abortion Services

Texas and Oklahoma’s laws are the only ones (to date) that explicitly classify employer coverage or reimbursement of abortion services through insurance or benefit plans as aiding and abetting unlawful abortion. The remaining states’ laws do not explicitly forbid employers from covering abortion services, but there is some risk that state criminal conspiracy and/or aiding and abetting laws may be cited against companies that cover these services, including those employers covering abortion medication or providing travel benefits.

Whether the Texas and Oklahoma statutes can be enforced against a company that provides reimbursement for a legally obtained abortion in another state or the related travel costs thereof will be the subject of continuing litigation. The general presumption against the extraterritorial application of state law would suggest that Texas and Oklahoma will have an uphill battle on their hands. Also, Justice Kavanaugh’s concurring opinion in Dobbs indicates that, at least in his view, a state may not bar a resident of that state from traveling to another state to obtain an abortion. This suggests that if the Court considered a case challenging a state statute prohibiting or restricting out-of-state travel to obtain abortion services, there might be five votes to strike down that statute, but no firm predictions can be made.

ERISA Preemption & Self-Insured Group Health Plans

For employers sponsoring self-insured health plans, the Employee Retirement Income Security Act (“ERISA”), the federal statutory scheme that governs employee benefit plans, will generally preempt state laws to the extent such laws “relate to” an employee benefit plan. The current legal consensus appears to be that a strong ERISA preemption argument exists against state civil laws seeking to prohibit a self-insured employer from covering abortion, abortion drugs, or travel for such services. However, ERISA cannot preempt state criminal laws of “general application,” so there is some risk a state may pursue an employer for criminal liability under “aiding and abetting” charges. It is also possible that the US Department of Labor will issue guidance clarifying the preemptive effect of ERISA in this area, although such guidance does not guarantee particular court decision outcomes.

Any travel and lodging benefits added to a self-insured health plan will be subject to ERISA requirements, including the Health Insurance Portability and Accountability Act (“HIPAA”), the Affordable Care Act (“ACA”), and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). Self-insured employers must be careful to consider how these additional regulations may add complexity to a travel benefit embedded in the group health plan.

Employers with Fully Insured Health Plans

Many employer-sponsored fully insured health plans already reimburse travel expenses in limited situations – the most common being the practice of sending patients to “centers of excellence” hospitals for certain transplant procedures or other high-cost, highly specialized treatments. Employers considering expanding travel reimbursement for less specialized medical care, but not for travel to related mental health or substance-use disorder facilities, may run afoul of the MHPAEA that restricts plans from having treatment limitations for mental health/substance-use disorders that are not applied to medical benefits generally. If a plan does or wants to offer specific abortion-related travel, a health plan should consider writing the travel benefit to be generally applicable to cover services unavailable within a certain radius of the employee’s home.

Another problem with enhancing the travel benefit of a group health plan is that it is only available to participants of the group health plan. Further, employers sponsoring high deductible health plans are prohibited from providing first-dollar benefits for anything other than preventive services, so meeting such an out-of-pocket deductible may make obtaining the service cost-prohibitive.

None of the travel benefits coverage may be available for employers with fully insured plans in states that restrict abortion access. Federal law does not require health plans to cover abortion services. However, the EEOC has interpreted the Pregnancy Discrimination Act to require employer-sponsored health plans to cover abortions in cases where the life of the mother would be endangered if the fetus were carried to term.

This may leave employers with employer-sponsored health insurance plans to consider what are the other coverage alternatives?

Medical Travel Benefits as a Health Reimbursement Arrangement (“HRA”)

Employers who sponsor group health plans (insured or self-insured) can offer employees reimbursement of medical-related travel and lodging benefits under a health reimbursement arrangement (HRA) that sits alongside the group health plan. HRAs are subject to ERISA, COBRA, HIPAA, and the myriad of other laws regulating group health plans. The drawback to using an HRA for medical travel purposes is that an HRA’s tax-free reimbursement of medical-related travel and lodging expenses is restricted by Section 213 of the Internal Revenue Code, which limits such benefits to an amount insufficient to cover actual travel costs. The Code allows HRAs to reimburse employees the standard IRS mileage rate for automobile-based travel but only provides for $50 per night for lodging expenses and potentially an additional $50 per night for a medically necessary traveling companion. Meals and other expenses are not considered “medical care” for tax purposes and are therefore not reimbursable.

Furthermore, an HRA must be integrated with other coverage or qualify as an Excepted Benefit. Otherwise, the HRA may violate the ACA rules prohibiting lifetime and annual dollar limits and require preventive care coverage without cost-sharing.

Medical Travel Benefits under an Employee Assistance Program (“EAP”)

With an Employee Assistance Program, employers may be able to provide medical travel benefits to all employees, not just those enrolled in the employer’s group health plan. For the EAP to qualify as an excepted benefit under ERISA, the EAP cannot provide significant benefits in the nature of medical care or treatment, cannot be coordinated with another group health plan, cannot charge a premium for participation, and cannot require any cost-sharing for offered services.

Wellness-Related Travel Benefits as a Taxable Reimbursement

In the past few years, “wellness programs” have expanded from the once narrowly tailored fringe benefit plans that would reimburse employees for gym memberships. Now, employers offer “Lifestyle Spending Accounts” that reimburse individuals for such diverse expenditures as cultural activities, green living, pet care, and family leisure. So long as the wellness program does not provide actual medical care, the reimbursement options are limitless. While such a program may be more costly because “wellness-related travel” is broader coverage than “medical-related travel,” an employer would not be required to substantiate the reason for the travel. Other than providing receipts for travel and lodging expense reimbursements, the employer would not know what employees are using their benefit for; thus, the employer could have no civil or criminal liability under state laws.

Concluding Thoughts

Among these myriad issues for employers to consider as they contemplate whether or how to respond to Dobbs and its impact, employers should be aware that third-party administrators of HRAs and EAPs may not be willing or able to administer travel reimbursement programs immediately, especially complex or customized versions. Further, any option that requires substantiation of the medical reason for the travel poses HIPAA privacy concerns and may chill the use of the benefit from the employee’s perspective.

What is certain is that some states will likely enact laws designed to deter employers from making abortion services access easier for employees in those states, and employers seeking to support access to abortion services will then consider other ways to aid employees who seek reproductive care. The Supreme Court will, no doubt, be called upon to provide further direction. The current Congress is already considering legislation to guarantee access to abortion services, but changes in the political composition of Congress could change the focus to legislation limiting abortion services. This will likely be an evolving area in the coming months and years.

This area of law is in flux and highly complex. This B-Alert is for informational and background purposes and should not be relied upon as attorney-client advice. Employers should consult legal counsel for benefits decisions. Bullard Law has experienced benefits counsel for specific guidance about these post-Dobbs issues.

The content of this Alert is provided for general information purposes only. It should not be considered legal advice or used as a substitute for consulting an attorney for legal advice.

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