May 11, 2022
As the country continues to grapple with the draft SCOTUS abortion decision in Dobbs v. Jackson Women’s Health Organization, leaked to and reported by Politico on May 2, 2022, employers contend with and prepare for fraught legal, political, social, and practical issues expected to arise if Roe’s federal protections are struck down. Although many employers may prefer not to publicly weigh in on the underlying abortion access debate, virtually all will need to understand how applicable state laws will impact employees’ and family members’ ability to seek legal abortion services and to decide whether to make changes to health plans or other programs, and how to communicate with employees in ways that are constructive and appropriate.
There has been no shortage of reporting on the leaked decision (Dobbs) (e.g., WaPo, NYT, WSJ) and continued illumination of existing and new fractionalization that is expected to sweep the country if it is finalized in its current form (e.g., maps and analysis by Politico and Time).
Why Your CEO May Care
A number of high-profile companies have publicized their intent to provide specific support for employees and family members seeking abortion services if they live in states that restrict or prohibit such access. (Reporting by: Forbes, Axios) These actions have drawn both applause and criticism from the various groups supporting each side of the overarching debate over governments’ ability to limit, prohibit, and/or criminalize abortion and a woman’s right to seek and receive such services. With employer engagement and publicity on these issues may come increased pressure for more companies, especially large employers with multi-state operations, to react, state a position, or “take a side”. We expect there are many companies and executives who are not prepared or able to provide an easy answer on the underlying social and political issues, but will want and need to determine external messaging, internal employee relations, and what, if any, changes to health plan or other benefit programs the company wishes to undertake.
If Roe v. Wade (Roe) (and subsequent affirming cases) were to be overturned or significantly weakened by Dobbs, it is generally expected that access to legal abortion services in at least 23 states will be significantly reduced or entirely prohibited. Although an oversimplification of the broader social context here, it is not uncommon for large, multi-state employers and their health plans to assess and make coverage and other program adjustments to address changes or identified gaps in provider access (e.g., local hospital system closures). While the underlying political and social debate over abortion can complicate the assessment and desire to engage, employers with health plans that cover abortion services should be mindful of these impacts and may be well-served to begin internal benefit team discussion now to help determine an intentional and thoughtful path forward regardless of whether they adopt benefit changes or communicate with employees before the final Dobbs decision is issued – expected in June 2022.
Anticipating the Change and What Employers Can Do Now
With support of legal counsel and consultants, employers should begin to consider and evaluate the elements at issue for their circumstances, health plans, culture, and employee relations. Some companies may choose not to react in anticipation of a final SCOTUS ruling on Dobbs, and single-state employers or those with insured health coverage programs may be more limited in their ability to make plan or coverage changes. As we’ve seen, certain employers will announce broad principles and programs, but invariably will need to continue to refine and revisit those assertions as the ruling is finalized and state laws are triggered or evolve. We have highlighted a number of factors and uncertainties employers may find helpful in developing their intended approach, but this is not an exhaustive list and like other early assessments will continue to develop as the legal landscape changes.
Existing state “trigger laws” drive differences
As reported, at least 23 states have some type of law that will significantly ban or limit access to abortion if Roe is overturned. Some of these laws were intentionally designed to be “triggered” by such SCOTUS action. Others exist because they were laws adopted pre-Roe that were nullified by Roe, but will be resurrected because they were never technically removed from the state’s enacted statutes. Certain state administrations, e.g., Michigan’s Governor Whitmer, have vowed to mitigate the effect of any historic law, but the legal landscape for seeking legal abortions if Dobbs is finalized as written is uncertain in many states and will likely remain so for some time.
Employer Actions: While each plan sponsor will have to decide whether to make plan and program changes, overturning Roe may have some practical impacts on the way even existing coverage is administered. As is usually the case under ERISA, employers that make plan changes will need to document and communicate them to participants. However, post-Dobbs consequences to existing coverage may mean that even employers who do not make adjustments will have some need to review and update communications and plan documents. To start, employers may wish to: (1) Assess states with worksites and/or where employees reside in light of trigger laws or other would-be limitations; (2) determine the desirability, scope, timing, and content of a voluntary communications plan, if any, (e.g., active employee education and/or responses to anticipated questions); (3) review plan documents and disclosures to assess if updates will be required and determine the anticipated timing for such materials.
Potential state civil and criminal penalties present unknown risks to companies and fiduciaries
Even if Dobbs overturns Roe, self-insured ERISA plans will generally still be able to rely on ERISA preemption to provide uniform coverage for legally provided medical services, including abortion. However, it is unclear whether certain state law enforcement efforts may attempt legal action against an employer that provides support or health plan coverage for state residents to seek abortion services out-of-state or beyond the limits set by the state of residence. Ultimately ERISA preemption may serve as a defense against such efforts, but without clear federal caselaw it may not serve to deter emboldened state-level enforcement in the near term. This means at minimum employers with robust abortion-related coverages may face increased litigation risk, scrutiny, and reputation management.
Employer Actions: Consult with counsel to ensure any benefit, payment, or other support designed to provide or resulting in assistance to individuals seeking and/or receiving abortion services is narrowly tailored to be on the most defensible grounds for ERISA preemption purposes. Although not a guaranteed defense or deterrence against more aggressive state action, in general, all ERISA plan benefits, including those applicable to abortion, should be limited to legal medical services performed in compliance with the applicable laws of the state where the medical services are rendered.
With respect to establishing a solid legal basis for health plan and other employer programs, employers should look holistically at each element of their plan or program. For example, while health plan coverage of transportation for medical care is often permitted, it is unclear if a state-level limit on abortion-related transportation would pose legal risks to a plan or employer for paying for at least the portion of travel that occurred within the limiting state. Additionally, telehealth and prescription-based abortions have become more widely available and pose unique challenges to ensure any coverage or support is well-founded. Plans that cover such services should engage with their vendors, including ASO providers, TPAs, EAPs, direct care providers, and others, to ensure they understand and appropriately manage the plan’s coverage and connection back to such services. For example, there may be legal risks to a plan for paying for telehealth and prescription-based abortion services that are legal in the state where the medical provider is located but limited or prohibited in the state where the patient resides or is located during the telehealth engagement. In some cases, overarching state limitations on cross-state and telehealth medical practice may govern such an arrangement, but with the heightened restrictions on abortion services, plans should ensure they appropriately understand and mitigate undesirable legal risks.
ERISA health plans may continue to be designed to cover abortion services and potentially travel for such services, but careful review and monitoring is recommended
It is our initial impression that the current federal rules, including the tax exclusion, related to coverage of abortions as medical care are not directly impacted if the Dobbs decision is finalized as written. Additionally, such rules related to a plan’s payment for transportation for medical care also appear not to be directly impacted.
Employer Actions: Although ERISA and federal tax laws are expected to be unchanged by a Dobbs decision directly, we suggest employers take this time to review existing or new abortion and/or abortion transportation benefits to ensure they are consistent with these federal rules and crafted in consideration of applicable state requirements (both directly pertaining to abortion limits, and any state tax issues). Notably, the publicity of expanded employer abortion-related transportation benefits has drawn criticism and potential for proposed legislation to change the tax treatment for such benefits. (Bloomberg reporting). Although in the current Congress it appears unlikely such a bill would pass and become law, employers should be aware of the developing consideration.
Business Group on Health will continue to monitor these and related matters, and provide updates on future developments. For any questions or comments, please feel free to contact Garrett Hohimer, Director, Policy & Advocacy at [email protected].
We provide this material for informational purposes only; it is not a substitute for legal advice.