Following the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, changes in state laws will impact health care plans and other employment policies across the country.
On June 24, 2022, the U.S. Supreme Court upheld Mississippi’s restrictions on abortion in Dobbs v. Jackson Women’s Health Organization, effectively overturning Roe v. Wade and Planned Parenthood v. Casey. After nearly fifty years of precedent, the Court decided that there is no constitutional right to abortion, leaving each state the power to regulate the legality of abortions within its borders.
Although targeted at abortion, this ruling will also impact many other facets of law, including employment law.
Revision of Employee Health Care Benefits
Following Dobbs, roughly half of the states may significantly restrict or ban abortions, prompting employers to revise their employee health care benefits. In doing so, employers should obtain legal counsel and carefully review their state’s regulations to determine what can or cannot be covered under the company’s healthcare benefits and available legal alternatives. The review should also consider whether the law applies to services received outside the state.
Additionally, employers should look to the Employee Retirement Income Security Act (ERISA).
Health Care Benefits and ERISA
ERISA provides companies with some protection against criminal or civil liability from state laws that attempt to regulate employer-sponsored benefit plans through its broad federal preemption provisions. However, ERISA is not a complete protection; many exceptions exist that can undermine this preemption, including state abortion laws. Namely, fully insured group health plans are subject to state insurance law. In states where the legislature disfavors abortions, employer plans that provide medical coverage through insurance are likely not allowed to provide abortion care coverage. Employers should ensure that abortion benefits offered under its ERISA plan are limited to benefits seeking a legal abortion with the state’s laws in which the medical service is performed.
There are also concerns about the exception to ERISA’s preemption of “generally applicable” state criminal laws. This exception is significant in states that expressly criminalize abortions or criminalize employers for “conspiring” or “aiding and abetting” abortions, such as Texas and Oklahoma. Because no clear federal case law regarding the ERISA preemption of state laws that attempt to impose criminal liability exists, there is little guidance for employers to reference.
In Justice Kavanaugh’s concurrence in Dobbs, he stated, “[f]or example, may a State bar a resident of that State from traveling to another State to obtain an abortion? In my view, the answer is no based on the constitutional right to interstate travel.” Employers who offer abortion-related travel benefits will have to monitor this untested area of the law continually.
Travel Costs
Companies may begin covering travel costs for those obtaining abortion procedures that are unavailable nearby. Many major companies, such as Amazon and Apple, have stated that they will cover abortion-related travel expenses. Similarly, Lyft and Uber said they would pay for the legal fees of drivers sued for completing trips to and from abortion clinics. However, companies will have to consider many issues in choosing to provide abortion-related travel expenses.
Section 213(d) of the Internal Revenue Code’s (IRC) definition of “medical care” includes “transportation primarily for and essential to medical care” sought by an individual. This definition does not limit itself to particular types of procedures, and employers could use this Section of the Code to create the framework for providing abortion-related travel costs through their existing medical plans. The Code applies to self-insured and insured medical plans. However, insured medical plans are typically governed by the state insurance code, which may not permit coverage for abortion-related travel costs. Conversely, self-insured plans provide employers with more flexibility regarding abortion-related travel.
There are many options for employers using self-insured plans to cover abortion-related travel, all of which contain disadvantages. First, employers with high-deductible health plans tied to health savings accounts (HSA) might consider adding abortion-related travel expenses to their plans. HSAs covering any kinds of travel costs, however, are not entitled to First Dollar Coverage and may yield a minimal benefit to those enrolled in high-deductible health plans. Second, a gross-up salary may avoid all health plan or medical expense rules. However, it taxes the employees, has issues accruing other income benefits, and might be seen as discriminatory. Third, companies could provide reimbursement of abortion-related travel expenses through a self-funded plan, such as a Health Reimbursement Arrangement (HRA). HRAs may become complicated if “medical expense” is redefined for tax-free IRC purposes. Fourth, employers could provide a one-time bonus or stipend for the abortion-related travel costs outside the company’s group health plan. Nevertheless, this option has a high taxation rate, may appear discriminatory, and creates potential issues regarding privacy and confidentiality if the policy is not HIPAA compliant.
Other Benefits
Companies may change their policies regarding parental leave and caregiving benefits. Where abortion is not readily available within a state, leading to people having more children, employers may provide benefits such as extended maternity leave, onsite care, covering expenses of other care services, and offering parenting classes.
In Pennsylvania
While abortion remains legal in Pennsylvania, the General Assembly is considering further regulation of abortion. The State will likely see an influx of travelers seeking an abortion, especially because many nearby states, namely Ohio, West Virginia, Kentucky, and Tennessee, are anticipated to ban abortion.
However, a proposed Amendment to Pennsylvania’s Constitution in the Senate (SB 956) prohibits taxpayer funding of abortion. To pass, SB 956 would have to obtain a simple majority in (1) both houses of the legislature in two consecutive sessions and (2) the general election. If the Bill were to pass, it would likely become effective sometime in 2023. In the wake of Dobbs, Pennsylvanians should carefully watch SB 956’s potential advancement through the legislature and, if it is put on the ballot in the general election, cast their votes accordingly.
What Employers Should Know
Employers must evaluate how state laws may change their health care plans and other employment policies. Although companies appear willing to adapt to support their employees contemplating abortion, there is still a looming fear of civil or criminal liability under state law. Therefore, companies will remain hesitant to give definitive answers regarding Dobbs’ impact on employment concerns until they receive specific guidance. Obstacles such as the variable nature of state laws regulating abortion and confusion over the extent of ERISA’s preemption of such laws set forth an extremely difficult task for employers.
