“Employers that are considering offering abortion-related benefits, such as out-of-state travel to a jurisdiction where abortion laws are more accommodating, should keep in mind compliance and liability considerations, benefits advisors point out,” reported the Society for Human Resource Management (SHRM) after Roe was overturned. “Employers that operate in multiple states will also need to navigate a patchwork of different rules affecting abortion coverage, depending on where covered employees and dependents live, work and receive health care.”
Texas Employers Adjust HR After Roe v. Wade Overturned
Texas was one of several states with so-called abortion trigger laws, which went into effect when Roe v. Wade was overturned.
One lawyer told the Society for Human Resource Management that “in states such as Texas, where a new state law bans most abortions after about six weeks and allows private citizens to sue anyone who “aids and abets” a prohibited abortion, “we are likely to see litigation of this issue” of employers reimbursing abortion travel and providing related benefits.”
D magazine reported that Lone Star State employers whose benefits had previously covered abortions were left with questions on multiple levels, including what was “advisable from a business standpoint, and what was legal?”
“Employers are having to reevaluate and make adjustments to their health plans,” reported D magazine. “Some are offering a flexible spending account; others are upping their coverage for childbirth to support their employees when there are often more jobs than people. The war for talent means that companies may be willing to spend more in this area to make the position more attractive in the new legal climate.”
SHRM: Companies Should Address Compliance Issues
The Society for Human Resource Management (SHRM) says that companies should review abortion-related coverage relative to applicable state laws.
Keep in mind that self-insured employers may be able to approach the issue differently than those with fully-insured plans.
“Self-insured employers may have more leeway to provide abortion assistance in states with restrictive laws, depending on how courts interpret the interplay between the federal Employee Retirement Income Security Act (ERISA) and state statutes, benefits advisors have noted,” reported the SHRM.
The Ropes & Gray law firm broke down the issue along the following lines:
- Employers offering fully-insured coverage: When a state prohibits the delivery of abortion services within its borders, any insurance company licensed by the state to issue insurance policies to employers and individuals in that state will be unable, as a practical matter, to provide covered abortion services within that state.
Similar to the current situation regarding state variation in abortion laws, many fully-insured plans operating in states where abortion would no longer be legal may have in-network providers in other states and/or provide coverage for out-of-network services. These fully-insured carriers could, subject to the points discussed below, continue to pay claims for abortion services provided in states where abortion remains legal.
Today, less than half of the states directly regulate coverage for abortion services under insurance policies (either requiring coverage or restricting it in private insurance plans), but that number could well increase. To the extent state law precludes an insurance company within the state from issuing coverage for abortion services, the insurance company would have to comply with such restrictions, as insurance is generally regulated by state law.
- Employers offering self-insured coverage: Employers who offer self-funded health care benefits for abortion services should be able to continue to offer this coverage to their benefits-eligible employees regardless of whether any states in which they have employees purport to ban insurance coverage for abortion services.
Self-funded plans’ ability to do so stems from the fact that such health plans are governed by ERISA, which contains a provision preempting any state law that relates to an employee benefit plan. While the question of what kinds of laws “relate to” an ERISA plan has spurred considerable debate, it is generally agreed that state insurance laws that mandate offering or excluding benefits “relate to” an employee benefit plan and would, therefore, be preempted.
“While self-funded employers can continue to offer coverage for abortion services under their group health plans, local access to these services for employees working or residing in states where abortion is prohibited will necessarily be restricted,” said the Ropes and Gray alert. “Fully-insured employers operating in states that prohibit insurance coverage for and access to abortion services will need to consider alternative means if they wish to continue providing assistance for these services.”
Companies Revisiting Benefits After Roe Decision
The SHRM reported in June after the Supreme Court overturned Roe some companies may “add coverage of travel expenses to obtain medical procedures, including abortions, not available nearby, or to ensure that parental leave and caregiving benefits meet the needs of new mothers who may be single or economically disadvantaged.”
The SHRM said that while some employers were reshaping abortion coverage under their group health plans, others were providing benefits outside of those health plans such as:
- Creating Relief Funds: These funds would help employees and dependents to pay – possibly through a health reimbursement arrangement — expenses for travel to another state for medical procedures.
- Offering One-Time Bonuses: These bonuses would help cover travel and procedure costs in a state that permits abortions.
“Most health plans don’t cover travel expenses, and if they do it’s usually to medical centers of excellence that provide high-value services such as cancer care or joint-replacement surgeries,” noted the SHRM.
Other issues that have been raised, according to the SHRM:
- Tax Issues: Companies will need to determine the tax considerations for any travel reimbursement as some of it could be deemed taxable.
- Abortion-Drug Coverage: Coverage specifications and denial policies in company health plans regarding abortion-inducing medications will need to comply with specific state laws.
- Excluding Coverage: SHRM says that employers “that offer health insurance are not required to pay for coverage of abortion except where the life of the mother would otherwise be endangered.”
- New-Parent Benefits: Companies must now focus on their parental leave, child caregiving benefits, and flexible work schedules, with an expectation that more births will now take place.
Most companies are trying to not take a political stance on this issue but chart a path that keeps them on the right side of changing laws, while meeting the needs of their employees.
“When discussing a sensitive topic like abortion, there is indeed the likelihood someone could get offended or have strong opinions,” Lisa Nelson, vice president of employee benefits, compliance and regulatory affairs at the Leavitt Group, told the SHRM. “Try to be matter-of-fact rather than having an opinion.”
