The following has been excerpted from Morgan Lewis. The full text can be found at
DOBBS V. JACKSON WOMEN’S HEALTH: IMPLICATIONS FOR EMPLOYERS AND EMPLOYER PLAN SPONSORS and at CONSIDERATIONS FOR EMPLOYERS AND EMPLOYER PLAN SPONSORS RELATED TO POTENTIAL CHANGES IN THE EFFECT OF ROE V. WADE
The U.S. Supreme Court released its opinion in Dobbs v. Jackson Women’s Health on June 24, 2022. The decision overturns prior Supreme Court decisions in Roe v. Wade and Planned Parenthood v. Casey, which held that the U.S. Constitution prohibits states from banning abortion or unduly burdening access to abortion services in the initial phases of pregnancy. At least 24 states have laws that can now be enforced barring abortion or imposing conditions beyond those previously permitted by Roe and Casey. The decision may also open the door for further state regulation regarding reproductive rights.
The Dobbs case involved a Mississippi law that prohibits persons from knowingly performing or inducing an abortion if the probable gestational age of a fetus is 15 weeks or greater, except in cases of medical emergency or severe fetal abnormality. This contravened the Supreme Court’s prior ruling in Casey, which affirmed Roe and held that state efforts to ban abortion prior to fetal viability (roughly 24 weeks) violated the U.S. Constitution.
The majority opinion upholds the Mississippi law and explicitly overturns the prior decisions in both Roe and Casey, finding that access to abortion is not a right protected by the Constitution. The decision “return[s] the issue of abortion to the people’s elected representatives” and opens the door to unfettered state regulation of abortion and abortion services.
Employers may struggle to remain compliant with federal and state laws in this environment, which we expect will change rapidly. The most pressing concern is likely whether employers can continue offering coverage of abortions through health benefit plans, including by reimbursing costs incurred when traveling to a jurisdiction to procure an abortion lawful in that jurisdiction.
STATE LAWS REGULATING ABORTION: THE IMMEDIATE LEGAL LANDSCAPE
As of June 24, 2022, at least 24 states have laws that criminalize abortion, including 13 states with “trigger laws” that criminalize abortion if Roe is overturned. Most states will be able to enforce these laws immediately. This includes the nine states with trigger laws that take effect once a decision overturning Roe is issued and the four states with laws that contravene Roe and Casey but were never formally enjoined by a court. The remaining four trigger laws take effect 30 days after a decision overturning Roe or upon the fulfillment of an interim condition, such as a state attorney general or other official confirming that Roe was overturned. The seven states with laws subject to active injunctions will need to petition the courts to have those injunctions lifted prior to enforcing those bans.
It is not expected that all these laws will be actively enforced. The current governor of Michigan, for instance, has signaled that she has no intention of enforcing the state’s 1931 law against abortion and led the effort to win an injunction against it prior to the Dobbs decision. The current governors of Wisconsin and North Carolina also appear unlikely to enforce the pre-Roe bans on abortion still on the books in their states.
The precise limitations imposed by the state laws vary. Sixteen of the laws prohibit abortion at any point in a pregnancy with only narrow exceptions. Six of the laws prohibit abortion once a fetal heartbeat is detected, which is roughly at week six of gestational development. Three laws prohibit abortion when the estimated gestational age of the fetus is 15 weeks or greater. Nearly all of the laws make performing an unlawful abortion within the state a crime.
Texas and Oklahoma have also recently enacted laws that permit individuals to file civil actions against entities that perform abortions or “knowingly engage in conduct that aids or abets the performance or inducement of an abortion, including paying for or reimbursing the cost of an abortion through insurance or otherwise.” Both the Texas and Oklahoma laws are being challenged in court.
The Texas and Oklahoma laws are the only ones that explicitly classify employer coverage or reimbursement of abortion services banned in those states through insurance or benefit plans as aiding and abetting unlawful abortion. The remaining laws do not explicitly forbid employers from covering abortion or abortion services through employer insurance coverage. There is some risk, however, that state criminal conspiracy and/or aiding and abetting laws may be cited against companies that cover abortion or abortion services, including receipt of abortion medication, within a particular state.
It is unclear whether the states will apply these laws broadly or narrowly, especially when persons who reside in one of those states seek abortion services outside the state’s borders. This will have particular resonance for employers considering travel and expense reimbursement policies for employees who need to leave a state to obtain abortion services. The state of Texas may argue, for instance, that a company or company benefit plan violates Texas law if it reimburses a Texas-based employee for an abortion received in a state that permits abortion, or for related travel costs.
The Texas and Oklahoma statutes do not provide a clear answer to that question, nor is it clear whether such a provision would be upheld. The general presumption against the extraterritorial application of state law coupled with constitutional concerns raised by that application counsel against a broad reading of their application. This issue will likely be the subject of continuing litigation and debate.
LEGAL FACTORS TO CONSIDER FOR ERISA EMPLOYEE BENEFIT PLANS
Employers with employees in states where abortion is illegal may consider different avenues to facilitate abortion access for employees and their dependents. Employers with plans that do not cover abortions may amend their plans to do so. Employers also may expand access to pharmaceutical abortions. However, these benefits may not be available in states that restrict or prohibit abortions.
In response, many employers are considering plan amendments that would cover travel and lodging expenses related to out-of-state abortions. There are several ways to provide these travel and lodging benefits.
Travel and Lodging Benefits Under Existing Group Health Plans
One approach is to add travel and lodging benefits to an employer’s existing group health plan. As a group health plan benefit, the travel and lodging benefits will be subject to ERISA requirements, including Health Insurance Portability and Accountability Act (HIPAA), Affordable Care Act (ACA), and Mental Health Parity Act rules. This approach also may not be available under a fully insured plan in a state that restricts abortion access.
In addition, the travel and lodging benefits would be limited to individuals who have enrolled in the employer’s plan. Employers will need to check with their third-party administrators to confirm whether the administrator is willing and able to oversee these benefits.
Travel and Lodging Benefits Under Health Reimbursement Arrangements
Another option is to reimburse travel and lodging expenses through an integrated health reimbursement arrangement (HRA). An HRA also is subject to ERISA, and an HRA cannot reimburse travel and lodging expenses above the (relatively modest) limits set forth in Section 213 of the Internal Revenue Code.
In addition, an HRA must be integrated with other coverage or qualify as an “excepted benefit HRA” or else the HRA may violate ACA rules that prohibit lifetime and annual dollar limits for certain benefits and require coverage of preventive care without cost sharing.
Travel and Lodging Benefits Under Employee Assistance Programs
A third option is to offer travel and lodging benefits under an employee assistance program (EAP) that is an excepted benefit. Because employers typically provide EAP coverage to all eligible employees without charging a premium, this provides the ability to offer the travel and lodging benefits to all employees, not just those who are enrolled in the employer’s group health plan.
The EAP would be an ERISA plan, but excepted benefits are exempt from ACA requirements. To be an excepted benefit, the EAP (1) cannot provide significant benefits in the nature of medical care or treatment; (2) cannot be coordinated with benefits under another group health plan, (3) cannot charge a premium for participation; and (4) cannot require any cost sharing for offered services.
The first requirement is subjective and requires a facts-and-circumstances analysis. This creates risk for employers because there is no way to know for certain whether a medical benefit is “significant.” The other three requirements are objective, which makes assessing compliance easier. However, it may be a challenge to find a vendor that can administer travel and lodging benefits provided through an EAP.
Travel and Lodging Benefits as Taxable Reimbursements
A fourth option is to offer a taxable reimbursement for any travel or lodging expense incurred by an employee or, more narrowly, a reimbursement for “wellness-related” travel. Under this approach, employers would require receipts for travel and lodging, but would not request substantiation of an abortion or other wellness expense.
This type of arrangement probably would be more costly for an employer because it is a broader travel benefit, but this approach also may protect the employer from civil or criminal liability under state law because the employer will not know whether employees are using the benefit to facilitate abortion access. Employees may be more willing to utilize this benefit if they are fearful of disclosing that they or a covered dependent has had an abortion.
However, this benefit also would not be subject to ERISA, which means the employer cannot argue that ERISA preempts a state law challenge to this benefit.
Many employers are concerned about potential civil or criminal liability for aiding and abetting abortion access. ERISA generally preempts state laws that “relate to” an ERISA plan but does not preempt “generally applicable” state criminal laws. The application of ERISA preemption to state civil laws that restrict abortion is less clear, but we believe ERISA generally will preempt a state law that does not involve an exercise of police power. Also, Justice Kavanaugh’s concurring opinion indicates that 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 that would prohibit or restrict out-of-state travel to obtain abortion services, there might be five votes to strike down that statute. It is possible that the US Department of Labor will issue guidance clarifying the preemptive effect of ERISA in this area.
DEVELOPMENTS TO TRACK
Issues in this area are expected to develop rapidly and employers should closely monitor developments.
Governors and state legislatures opposed to abortion will likely move quickly to pass laws regulating access to such medical services if they do not currently have them in place. While most state legislatures are currently out of session, they can be reconvened for special sessions on this topic. We also anticipate that some states will consider more stringent bans on abortion as well as legislation aimed at prohibiting employers from adopting policies that help employees obtain out-of-state abortion services.
Employers face the difficult task of navigating these competing movements. Employers should continue to monitor the situation closely and engage with legal counsel to develop policies that comply with their various legal obligations.