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The majority of employer-provided healthcare plans currently cover abortion procedures, although some states already ban the procedure. With the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization that overturns Roe v. Wade, experts believe up to 26 states may enact laws to restrict or completely ban abortions. Other states, including Colorado, are taking steps to ensure continuing legality of abortions, and a few, including California and New York, are in the process of strengthening support for legal abortions. As of this writing, Arizona, New Mexico, Utah, and Wyoming are not taking action to protect the legality of abortions. 

How Roe v. Wade being overturned affects employer benefit plans, and, ultimately, employees is complex. Whether or not the state the employee resides in bans abortions, along with the way the organization’s health plan is funded, will determine the options the employer has for continuing to provide coverage for abortion. 

Fully Insured Plans 

What may be covered under a fully insured plan is determined by state law in the state where the plan is written. If the state allows legal abortions, they can be covered under the plan. In some states, a supplement is required for abortion coverage. If the state bans abortions, that coverage will need to be removed from the plan. Employers could consider providing travel benefits to individuals to go to a state where the procedure is legal.

Self-Insured Plans 

Self-insured and partially self-insured plans may cover any medical procedure legal in a state. If the state the employee is in doesn’t allow abortion, employers can allow pre-tax travel benefits for the employee to go to a state where it is legal. The Employee Retirement Income Security Act (ERISA) allows the travel expense to be paid pre-tax. The plan can cover a procedure in a state where it is legal, even if the employee doesn’t reside in that state.  

If an employer is considering plan changes to expand coverage and/or travel reimbursement for abortion services, it may want to consider doing the same for other procedures not available locally due to Mental Health Parity requirements, which prohibit imposing more restrictive non-quantitative treatment limitations on mental health/substance abuse disorder benefits than medical/surgical benefits.

Issues Around Providing Travel Benefits

Some employers may want to explore providing travel benefits to employees wishing to go to another state. Below are things to consider.

• What travel benefits can be provided? Travel benefits may, depending on the organization’s plan, cover the cost of reasonable travel expenses, including limited reimbursement for lodging and meals (if certain criteria are met).

• Network issues for traveling to receive services: Organizations may need to expand their networks to have providers available for participants traveling to a state where abortion is legal to receive services.

• What about FSA, HRA, HSA reimbursement? Costs for procedures allowed by the plan and legal where they are performed can be reimbursed under a flexible spending account (FSA) or health savings account (HSA) as pre-tax. There are unique rules for health reimbursement account (HRA) reimbursement. Travel expenses not paid by the employer may be reimbursed from these accounts as well. See IRS Publication 502 for more information on allowable travel expenses.

• HDHP Plans and HSA Contributions—Special Considerations: High deductible health plans (HDHPs) have special complications around covering travel expenses. Covering travel expenses prior to the individual meeting their HDHP deductible makes them ineligible to make HSA contributions. That means employers could cover travel expenses only for those who have met their HDHP deductible for the year.

• Privacy Considerations: An individual’s need for travel expense reimbursement may be outside of coverage under the Health Insurance Portability and Accountability Act (HIPAA) since the information is coming from the individual, not through the health plan. It would still be subject to other privacy requirements, however.

What Kinds of Plans Can Employers Use to Meet Travel Needs for Abortion?

• Coverage within the medical plan:  Some plans already include coverage for travel expenses for medical treatment, and plans that do not currently cover it could consider adding it. This coverage could extend to travel for abortions where the individual’s state bans the procedure. Covering other procedures besides abortions could make it less likely to trigger civil or criminal penalties or other forms of retribution that are included in some states’ abortion ban laws. 

• Coverage outside the medical plan:  Although less common than the above, some employers may seek to provide travel benefits outside their medical plan, for example, through an EAP plan. While coverage through an EAP could allow pre-tax travel benefits, this approach may cause the EAP to be considered a separate group health plan subject to the Consolidated Omnibus Budget Reconciliation Act (COBRA).

• Using a separate foundation:  Some employers have foundations that assist in cases of medical hardship; travel benefits could be made available through the foundation.

Criminal Penalties

Some states’ laws include the option to criminally prosecute those who aid and abet an individual getting an abortion. While this could include a wide variety of people who might be involved in the individual’s travel, providers of the procedure are certainly at high risk. In response, some states that will retain legal abortions are setting up laws to protect providers from being extradited to another state to face charges. For self-insured plans, ERISA may pre-empt this activity, but that’s not currently clear. 

Action Items for Employers

Know the laws in your state, especially if you have an insured plan. Work with your broker on changes to your insurance contract in response to any changes in your state’s laws on abortion.

If you’re self-insured, and have employees in states where abortion becomes prohibited, the organization will need to decide whether to continue to cover the procedure where it is legal and determine whether to cover transportation expenses for individuals traveling to legally obtain the procedure. Review your plan to determine if it already covers travel expenses or if that would need to be added as a plan amendment. Your plan’s attorney and third-party administrator can be involved to make any desired changes and advise on things like employee notices.

Employers Council members are welcome to contact us with questions.