The legal environment relating to abortion coverage has become quite complex following the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization. Health plan sponsors should review their coverage of abortion services to ensure that their health plans reflect the coverage they intend to provide and also review legal compliance and administrative issues.
These are the key takeaways offered by attorneys Neal S. Schelberg and Roberta K. Chevlowe during the International Foundation webcast “Dobbs v. Jackson Women’s Health Organization: Implications for Employers and Employee Benefit Plan Sponsors.” Schelberg is a partner at Proskauer Rose LLP, where Chevlowe is a senior counsel.
In June 2022, the Supreme Court overturned its prior rulings in Roe v. Wade and Planned Parenthood v. Casey and concluded that the Constitution does not protect the right to abortion, allowing states to regulate or prohibit it.
“The decision has led to a host of considerations for employers and other plan sponsors in the design and administration of their health plans,” Schelberg said. “There are many open questions that have been begun to and will continue to play out in real time in both the federal and state courts and legislatures.”
Those issues will test the limits of Employee Retirement Income Security Act (ERISA) preemption, principles of extraterritoriality, constitutional issues of privacy, interstate travel and more, he noted.
Schelberg explained that the ruling neither requires nor prohibits health plans from providing coverage for an abortion; however, it eliminates the U.S. Constitutional right to obtain an abortion and instead gives full power to the states to decide access to abortion services.
Approximately one-half of states now have or will soon have laws that ban or limit abortions to the early stages of pregnancy.
- A few states have “aiding and abetting” laws that impose civil and/or criminal liability on individuals or entities that help someone obtain an abortion.
- Additional state laws are likely to be enacted that may affect insurance, taxes, health care providers and medications used in abortions.
- There has been discussion about whether some states may seek to impose prohibitions on conduct that occurs outside of their state. For example, would a state law that bans abortion or has an “aiding or abetting” law prevent an in- or out-of-state health plan from paying for or reimbursing expenses for an individual’s travel to obtain an abortion where it is legal?
What Should Health Plan Sponsors Do Now?
Plan sponsors should review their plans and determine what reproductive services they currently cover and whether that will change because of the Supreme Court’s decision. Chevlowe recommended looking at (1) whether the plan covers a medical abortion only when it’s medically necessary or also when it’s elective, (2) what abortion medications the plan covers, (3) whether the plan has a travel benefit and if that includes travel to access an abortion and (4) what in- and out-of-network benefits the plan offers and the potential consequences of a participant seeking an abortion outside of the state.
Chevlowe emphasized that a key question is whether the plan is self-funded or fully insured.
If the plan is self-funded: The plan may continue to cover abortions and other reproductive care, assuming that the procedure or medication is legal where it is obtained. This means that the plan can cover abortion services legally provided in another state, even if the participant works in a state where abortion is not legal. This is because self-funded plans are regulated by ERISA, which preempts state laws that “relate to” employee benefit plans.
However, plan sponsors should consider risks that may be created by state “aiding and abetting” laws. While ERISA generally preempts state civil laws, it does not preempt “generally applicable” state criminal laws. Chevlowe also noted that if a plan has stop-loss insurance coverage, one question to look into is where the policy was underwritten and whether the insurer might raise issues about coverage in a post-Dobbs world. In addition, plans that make benefit changes likely need to notify their stop-loss insurer of the coverage change, Chevlowe noted.
Third-party administrators (TPAs) and pharmacy benefit managers (PBMs) also may place limitations on coverage.
If the plan is insured: Plan sponsors need to know which state laws apply to the plan. State insurance laws are not preempted by ERISA for these plans, and states prohibiting or limiting abortion will likely require that insurance policies written in their state exclude or limit coverage for abortion or other reproductive care.
“If your plan is insured, the first question you need to ask is where is that policy issued.” Chevlowe said. Plan sponsors should contact their insurers or brokers to determine where the policy is issued, and whether policy changes are being made by the insurer. “You may not get answers immediately, but you should definitely start having these discussions.”
Travel Benefits to Access Reproductive Care
Some group health plans already provide travel benefits (such as for transplants at centers of excellence) and may consider expanding those benefits for travel expenses incurred to access abortion if it is illegal in the individual’s state of residence.
If considering expanding or adding a new benefit, again the most important question is whether the plan is insured or self-funded.
If the plan is insured, state law requirements and restrictions may impact the availability of expanded or new travel benefits. A travel benefit is not likely to be available for an insured plan in a state where abortion is banned or significantly restricted. Even if the state does not have a ban, plan sponsors should remember that insurance companies generally are required to obtain approval from state regulators to add benefits to a policy.
Some companies with insured plans that cannot add a travel benefit to the insured benefits have been considering whether they could provide a self-funded travel benefit for these expenses. That can be done but there are issues to work through, Chevlowe said.
For example, there are administrative and design issues to consider for self-funded plans that use a TPA. One of the biggest considerations is what type of travel benefit the claims administrator offers. “They may administer plans for thousands of different sponsors. They may give you a menu of options to choose from related to annual and lifetime limits, distance limits and issues like that,” Chevlove explained. In addition, some claims administrators and TPAs are asking for hold harmless agreements because they may take on some legal risk with respect to state liability and they want to be protected.
Another important item to consider is the IRS limits on tax-free reimbursement of travel benefits and whether plans can exceed those limits. In addition, plan sponsors should consider the following issues with regard to travel benefits:
- Compliance with the Health Insurance Portability and Accountability Act (HIPAA) and state privacy laws. Plan sponsors and plan administrators must ensure that they keep information related to participants who are seeking an abortion confidential, and have the proper procedures and protections in place, including not disclosing the information when HIPAA does not allow it.
- Mental health parity. Group health plans offering mental health or substance use disorder benefits must provide them in parity with covered medical and surgical benefits. These issues should be reviewed with legal counsel.
- High-deductible health plan (HDHP) limits. Generally, these plans cannot provide first-dollar coverage of travel expenses until the individual meets the annual deductible.
- Alternative approaches. Travel expenses generally may be reimbursed outside of a primary group health plan through account-based plans including health savings accounts (HSAs), health care flexible savings accounts (FSAs), or health reimbursement arrangements (HRAs), subject to some limitations. It may also be possible to reimburse these expenses through an employee assistance program (EAP), but counsel should be consulted. Some employers also are considering “pay as you go” ad hoc reimbursements, although this may create risks, including compliance issues and loss of the ERISA preemption defense.
Another post-Dobbs benefit consideration is the impact on pharmacy benefits.
The Food and Drug Administration approved the first drugs for medication abortion in 2000 and these drugs have been available for at least 20 years. The U.S. Attorney General has issued a statement that states may not ban FDA-approved abortion pills and medication. Whether the FDA approval of an abortion drug would preempt and supersede a state’s ban on abortion is presently being litigated in the courts, Schelberg said.
Another question is whether PBMs can deliver abortion-related drugs to states through mail order where abortion is illegal. PBMs are licensed by states and states enact laws that impact PBMs, and some states prohibit shipping to their residents of these types of medications.
Takeaways and Next Steps
Immediate steps for plan sponsors include the following:
- Review current coverage. “You should check your health plans,” Schelberg said. Review the plans to “ensure that it accurately reflects whatever the plan sponsor’s intentions are relating to coverage for abortion and abortion-related services.”
- Determine whether the plan is insured or self-insured. “If the plan is self-funded, there is a good basis for ERISA preemption arguments,” Schelberg noted. If the plan is insured, determine where the policy is underwritten and confer with the insurer regarding coverage in the states where participants reside and whether any changes are being implemented by the insurer. “There should be good communication between the plan and the insurer on these issues,” he said.
- If contemplating changes, discuss with claims administrator or insurer.
- Consider notice requirements. Any changes in coverage should be communicated to participants, recognizing that there are different viewpoints on these issues. “Definitely consider the culture of your organization,” Chevlowe said. “Think about that when you’re drafting.”
- Stay tuned. “This is a rapidly changing legal and legislative environment. It’s going to be challenging to stay on top of the developments,” Schelberg cautioned.
“The bottom line is . . . gather as much information as possible from your insurer, your claims administrator and pharmacy drug manager. Talk through what the benefits are, what you want them to be, and also talk with counsel about the potential risks of any changes you might be considering,” Chevlowe said.
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