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U.S. Supreme Court Abortion Decision Leaves Employers With Many Questions



Introduction


In its landmark ruling in Dobbs v. Jackson Women’s Health Organization, the United States Supreme Court overturned nearly 50 years of pro-choice precedent. The Supreme Court held that Roe v. Wade and its progeny were wrongly decided and that the U.S. Constitution simply did not afford women a specific constitutional right to terminate an unwanted pregnancy. Rather, the Supreme Court said it was for each of the 50 states to decide whether to permit, restrict, or outlaw abortions. The Dobbs decision has left open a myriad of questions for employers. We explore some of them below. 

 

State Abortion Laws


By leaving the abortion rights decision to state legislators, the Supreme Court set the stage for a patchwork of rules on the subject. 

 

For example, 16 states and the District of Columbia have laws that guarantee the right to abortion: CA, CO, CT, DE, DC, HI, IL, ME, MD, MA, NV, NJ, NY, OR, RI, VT, WA. These states permit (or in some cases, require) employers to have their health plans cover abortion services.

 

Yet, as many as 26 states have (or will soon have) laws that significantly restrict or ban abortions. These laws vary from state to state. Some states prohibit abortions altogether, whereas others only allow for abortion access in cases where the health of the mother is in jeopardy or the pregnancy was the result of incest or rape. Some even go so far as to restrict access to abortion-inducing medications. And, several states attach civil and even criminal liability to those who obtain an abortion and to anyone who merely “aids and abets” abortions. 


Indeed, thirteen states (AR, ID, KY, LA, MS, MO, ND, OK, SD, TN, TX, UT, WY) have laws that criminalize abortions. And, Texas and Oklahoma deem employer coverage or reimbursement of abortion services through insurance or benefit plans as "aiding and abetting unlawful abortion." Specifically, the Texas Heartbeat Act allows individuals to sue others who "aid and abet" abortions and receive a $10,000 reward for doing so.

 

Recently, a national law firm with an office in Texas announced its intention to provide its Texas staffers with financial support for travel to a state where abortions are not outlawed. In response, on July 7, 2022, the Texas Freedom Caucus threatened the leaders of that firm with criminal prosecution and disbarment, suggesting that providing travel costs to employees traveling out of state for an abortion violates the state's “bounty hunter” law. The Caucus also proposed state legislation that will “impose additional civil and criminal sanctions on law firms that pay for abortions or abortion travel.” If passed, that legislation will allow private citizens to sue "anyone who pays for elective abortion performed on a Texas resident, or who pays for or reimburses the costs associated with these abortions." The new legislation will also require the State Bar of Texas to disbar any lawyer who violates these laws.

 

In other developments, a U.S. Senator in Oklahoma recently blocked a bill aimed to protect the freedom to seek an abortion across state lines. The Indiana Attorney General recently threatened to criminally charge an Ohio doctor for providing an abortion to a 10-year-old rape victim. Other states may soon follow, as additional politicians and advocacy groups pursue restrictive anti-abortion laws.

 

Health Plan Considerations and Access to Abortion Services


In the wake of the Dobbs decision, many employers are considering adding medical travel expense reimbursement benefits or other abortion-related benefits to their existing medical plans where they have operations in states that currently restrict or ban access to abortions (or in states that are expected to do so in the near future).

 

Overall, in determining whether to amend their employer health plans, employers should evaluate the following: (1) the geographical makeup of their employee population (i.e., if they have employees working in states that outlaw or restrict access to abortion care services); (2) whether their current health plan is self-insured or fully insured; (3) the extent to which their health plans cover abortion and related services; and (4) whether the state law restricts or bans abortion related health services.

 

1.      Travel-Related Benefits


Many employer health plans cover abortion services, and some also reimburse travel expenses for abortions. These services, like many others, may not be specifically mentioned in plan documents or summary plan descriptions. Employers wishing to offer such benefits should consult with the plan sponsor to verify if such benefits exist and how to access them.

 

The law currently allows health plans to provide reimbursement for travel primarily for and essential to medical care. Nonetheless, employers who do so will want to verify with expert benefits counsel whether such policies are at odds with applicable state laws and the federal Employee Retirement Income Security Act of 1974 (ERISA).

 

2.      Oral Contraceptives and Abortion-Inducing Medications as Health Benefits


Some employers wish to help their employees gain access to birth control contraceptives, the morning-after pill, or abortion-inducing medications, such as Mifepristone. This may be an option for employers looking to support their employees beyond providing travel reimbursement. Access to abortion-inducing medications may be especially helpful, for example, in states where elective abortion is limited to the first 15 or 20 weeks of pregnancy. Employers looking to provide these benefits should determine whether these medications are covered under their medical or pharmacy plan.

 

The future of an employer’s ability to provide access to abortion-inducing medications is unclear. The Biden administration stated that States may not ban the use of abortion-inducing medications because they are deemed safe and effective by the Food and Drug Administration. However, states may seek other paths to criminalize these medications, and employers should continue to monitor future guidance regarding this issue.

 

Weighing Risks and Liability of Providing Abortion-Related Benefits Through Employer Health Plans


Benefits added to a self-insured health plan will be subject to ERISA requirements, including the Health Insurance Portability and Accountability Act (“HIPAA”), the Affordable Care Act (“ACA”), and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). Employers wishing to enhance these benefits should consult with the plan administrators and benefits counsel.

 

Traditionally, employers sponsoring self-insured health plans have relied on ERISA to preempt state laws that attempt to regulate employer-sponsored benefit plans. This is because, under ERISA, states have no authority over private, self-funded employee medical benefit plans. Experts have opined that courts may well uphold ERISA preemption challenges to state abortion laws that affect employer-sponsored benefit plans, including civil provisions on “aiding and abetting” abortions that violate state law. This is based upon the fact that in most cases, ERISA preempts or supersedes state laws that relate to an ERISA plan. Thus, it may be argued that state laws limiting travel benefits or access to certain medications would be preempted by ERISA.

 

However, ERISA is limited and will not provide bulletproof protection for employers against all state laws relating to health plans. There are several important exceptions that can undermine ERISA's preemption of state law. First, ERISA does not preempt state insurance laws. As a result, employer plans – that provide medical coverage through the purchase of insurance (rather than self-funding plans) – are subject to state insurance regulations and laws. As stated above, some state laws may prohibit coverage for abortion care or other health care services.

 

Second, ERISA does not preempt “any generally applicable criminal law of a State,” and states wishing to limit access to abortion care may update their general criminal laws following Dobbs.

 

Legal Protections For Employers Providing Abortion-Related Benefits


Several states have passed laws that either require abortion service coverage as an essential health benefit or place restrictions on abortion services provided by private health insurance plans. Although federal law does not require health plans to cover abortion services, the federal job bias statute called Title VII of the Civil Rights Act of 1964 does not prohibit abortion services coverage and the United States Equal Employment Opportunity Commission (EEOC) has interpreted the Pregnancy Discrimination Act to require employer-sponsored health plans to cover abortions when a mother's life is endangered. In fact, states must provide coverage for medical complications that arise from an abortion, regardless of whether abortions are covered within the plan.

 

Importantly, Justice Kavanaugh noted in his concurring opinion in Dobbs: "[A state may not] bar a resident of that state from traveling to another state to obtain an abortion."

 

Furthermore, some tax experts opine that under Internal Revenue Code Section 213(d), it would be perfectly legal for employers to provide abortion-related travel benefits through existing medical plans. Abortion falls within the definition of “medical care” under Section 213(d). Therefore, it can be argued that travel to obtain legal medical care may be covered by a group health plan (insured or self-insured). This may be an added benefit to the employer itself, as certain travel and lodging expenses can be reimbursed, and thus are excludable from income for an employee. However, we caution that all of this should be vetted by expert tax and benefits counsel.

 

Another important consideration for employers with insured medical plans is that only health care services that are “legal” qualify as “medical care,” so abortions may not be covered in states where it is illegal. Also, an insurer may choose not to offer a travel benefit for such services, even if permitted to do so. In contrast, self-insured plans provide employers greater flexibility in plan design over the types and levels of benefits to be covered.

 

Exploring Alternative Options Outside of Health Plans


What follows is a list of approaches being considered by some employers. In each case, employers are cautioned to address legal compliance with benefits, tax, and labor counsel before implementing any of these suggestions.

 

1.      Creating a Relief Fund: Employers can develop an informal relief fund to pay expenses for employees and dependents who need to travel to another state for abortion health care services.

 

2.      Offering a One-time Bonus: Employers offer employees bonuses to cover the costs of travel and procedures in a state permitting abortive care.

 

3.  Health Reimbursement Arrangement: Health reimbursement arrangements (HRA) are a type of account-based health plan that employers who sponsor group health plans (insured or self-insured) can use to reimburse employees for their medical-related travel and lodging expenses. Employees (and any eligible household members) must enroll in individual health insurance coverage or Medicare to be covered by the individual coverage HRA. HRAs can also be offered as "excepted benefits," which allow employers to finance additional medical care (for example, employers can finance vision or dental coverage, coinsurance and copayments for individual health insurance coverage, short-term limited-duration insurance, or other health care costs not covered by their primary group plan) even if the employee declines enrollment in the traditional group health plan.

 

4.      Employee Assistance Program: Employers can offer an Employee Assistance Program (EAP), which can provide medical travel benefits to a broader employee population than those employees who participate in the employers' medical plans. For the travel benefits to qualify under ERISA: (1) the EAP cannot provide "significant benefits in the nature of medical care"; (2) the EAP cannot be coordinated with benefits under a group health plan; and (3) benefits under the EAP cannot be financed by another group health plan. If a program is structured to provide only travel benefits, it may qualify as an EAP and would be exempt from various group health plan mandates.

 

5.      Wellness Programs: In recent years, employers have offered expansive fringe benefits through Wellness Programs. These benefits – separate from an employer-sponsored group health plan – often include expenditures on voluntary, lifestyle spending, which may include gym memberships, free time to attend health classes, and health screenings. Wellness Program offerings are essentially unlimited, so long as the Program does not provide actual medical care (it may be considered a group health plan if it does).  Employers wishing to adopt a wellness program should review applicable guidance from EEOC and any relevant state or local job bias agency.

 

Since employers are not required to know what employees are using their benefits for, this approach may afford employers with some immunity from the legal concerns mentioned above.

 

Please note that providing a travel benefit outside of an employer group health plan could create another group health plan that would raise numerous compliance issues, including those concerning ERISA, HIPAA privacy, and COBRA rights.

 

Reviewing Employer Policies Post-Dobbs


Certainly, employers and employees alike will have mixed reactions to the highly controversial Dobbs decision. Employers should communicate the importance of respect in the workplace, regardless of employees' varying political opinions, as some conversations could trigger harassment or discrimination claims.

 

Further, employers may choose to review their dress code policies and social media policies. For instance, it has been reported that some employees have elected to advertise their position regarding abortion care by wearing garments or facemasks with slogans that address the issue. These have already sparked controversy among employees with strongly held differing views.  Employers should consult with labor counsel regarding any policies which regulate "speech" on employee garments.   The National Labor Relations Act gives employees certain rights regarding clothing with slogans. This area of the law should be reviewed before taking any disciplinary action.

 

Relocation protocols should also be reviewed, given that employees may want to move to offices or telework in states with different approaches to abortion care. If employers wish to offer employees the opportunity to relocate to a state with laws in line with their views on abortion care, employers should be certain that doing so will not run afoul of other employee rights or be viewed as discriminatory. 

 

Privacy Concerns for Employees


HIPAA privacy concerns may raise yet another legal box to check off as employers consider assisting employees with abortion care. If assistance is provided, employees may need to justify the request by providing HIPPA covered medical information. These concerns may have a chilling effect on employees who wish to obtain this reimbursement.

 

Talent Retention


With the Great Resignation, far too many employers are struggling with talent acquisition and retention. The company’s position on providing (or not providing) abortion care may spark some employees to seek employment elsewhere.

 

Takeaways


For employers with employees working in states that restrict or ban abortion health care services, there are numerous (sometime conflicting) legal and HR concerns to be balanced in selecting an approach to addressing these matters. Employers should understand what their health plans provide and any state or local laws that may affect those offerings post-Dobbs. Employers should also be prepared to communicate that information to affected employees and to answer questions from employees who may challenge the employer’s approach. This not only includes those in the C-suite, but also line managers who are deemed “agents” of their employers. At a minimum, employers need to ensure that policies on workplace decorum are followed and evenhandedly enforced and that no employee suffers any adverse treatment for expressing or merely holding a view on this controversial subject.


It appears that the abortion rights debate is anything but settled. And, the Supreme Court will likely be called to provide further direction regarding the implications of this case. On July 8, 2022, President Biden signed an Executive Order, aimed to safeguard legal access to medical abortion pills, contraception, and emergency medical care. The Executive Order also attempts to protect patient privacy, launch public education efforts, and bolster legal options available to those seeking and providing abortion services. Pundits have suggested that legal challenges to the Executive Order are already in the works.

If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact at 818-508-3700 or visit us online at www.brgslaw.com.


Sincerely,

Richard S. Rosenberg

Teri A. Gibbs

Sherry N. Shayan

www.brgslaw.com
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