Issues for Employers After Dobbs v. Jackson Women’s Health Organization
Following the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, which overturned Roe v. Wade, some employers are considering whether to offer coverage for abortion services and related travel expenses to employees and their dependents who reside in states that have banned or restricted abortion services. On the employee benefits side, there are various options available to employers depending on factors such as whether their existing health plans are self-insured or fully-insured, whether they offer high-deductible health plans with health savings accounts (HSAs) and whether they provide health plan coverage through a third-party professional employer organization (PEO). Employers providing health plans have always had to deal with numerous federal laws in administration (including the Employee Retirement Income Security Act (ERISA), the Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), but those with self-insured plans have had less experience with state laws since ERISA generally preempts many state laws. On the employment law side, employers need to be conscious of existing federal anti-discrimination laws related to pregnancy-related conditions, including abortion.
Due to the nature of the state-by-state regulation and ongoing developments in state and federal regulations, there is much uncertainty regarding many of these issues. Below is a brief summary of (1) some potential options to structure these employee benefits, including certain key issues and risks, and (2) the employment law issues that may arise.
Abortion Coverage Under Group Health Plans
Employers who are considering responses to employee concerns about the ability to obtain abortion services should first review the terms of their health plans to determine whether their plans provide coverage for abortion and the specific terms of such coverage.
Generally health plans (other than plans maintained by church and governmental organizations) are subject to ERISA, which generally preempts state laws to the extent they “relate to,” among other things, health plan benefits. However, state law restrictions on abortion services could impact the ability of an employer to include such services in their health plans.
Employers that provide health coverage through fully-insured plans or through the plans of a PEO likely will have their desire to offer abortion coverage limited by the terms of the insurance carrier’s or PEO’s plans, which may have restrictions regarding the types of services that may be provided through their health policies or plans. Fully-insured plans, as opposed to self-insured plans, also are governed by the insurance laws of the states in which the insurance policies are issued. Presumably, health insurance policies issued in states that ban or restrict abortion services will contain such abortion restrictions.
Employers who provide health plan coverage to employees through self-insured plans may have more choices to cover abortion services. However, there is a risk that some states may attempt to impose criminal liability on individuals and entities who assist individuals in obtaining abortion services. How successful such a criminal charge would be is not yet certain. Many of these charges would involve complex “extraterritoriality” provisions seeking to impose liability for actions taken in another state. It also is unclear under ERISA whether such criminal charges could be imposed on employers that offer abortion services through their self-insured plans and on their employees and others that administer such plans. While ERISA preempts many state laws, it does not preempt “generally applicable criminal laws” of a state. How these state criminal liability charges would apply to an ERISA-covered self-insured plan remains to be seen, but will almost certainly be the subject of litigation.
Providing Travel Benefits Through Health Plans and EAPs
One option many employers are considering is to provide travel reimbursements to employees traveling out-of-state for abortion services. Providing coverage for medical travel under a self-insured plan would allow certain expenses to be covered on a tax-free basis, subject to IRS limitations. Under IRS rules, reasonable airplane, train or bus fare to a different location could be covered on a tax-free basis. However, tax-free reimbursements for lodging are limited to $50 per night (potentially increasing to $100 if the individual is traveling with a “caregiver”), and reimbursements for meals and incidental expenses would be fully taxable.
As with abortion services, the ability to pay for travel benefits under a fully-insured plan may be limited by the terms of the insurance contract and applicable state law requirements.
Some employers may consider adding a standalone health reimbursement arrangement (HRA) or adding an (or adding to an existing) Employee Assistance Program (EAP) to pay for expenses incurred by employees who must travel out of state to obtain abortion services. Due to requirements under the ACA, an HRA would need either to be “integrated” with the employer’s existing group health plans, which may restrict which employees may receive these benefits, or to be an “excepted benefit” HRA, which would limit the amounts payable under the HRA. This analysis may be further complicated if an employee offers a high-deductible health plan with an HSA. An EAP would similarly need to be structured to be an “excepted benefit.”
There is still considerable uncertainty and risk related to the imposition of criminal charges relating to providing or reimbursing travel costs in connection with obtaining abortion services.
Providing Travel Benefits Outside a Plan
Another option an employer may consider is to provide travel reimbursements as a standalone policy outside of existing employer plans. While this option could provide employers with flexibility in deciding the terms of the policy, there are additional risks with this approach, including privacy concerns about the employer having access to employees’ private information. First, providing travel reimbursements for medical coverage outside of a health plan may be found to create another “group health plan.” If an employer implements a standalone travel reimbursement policy, the employer should carefully consider a plan document and the other applicable health plan requirements of ERISA, COBRA, the ACA, and various reporting rules. If provided, these amounts might be taxable and subject to income and employment tax withholding requirements. Employers may want to consider whether to “gross up” the travel reimbursement for the costs of the taxes. Second, employers who choose to reimburse travel benefits outside of a plan should consider state and federal privacy issues.
Other Benefits Considerations
When implementing any of these policies, employers will want to consider how they disclose any new or expanded abortion benefits available to employees and dependents, both to employees and to other stakeholders.
Employers who offer travel benefits for abortion services will also want to carefully consider what other travel benefits are currently offered under, or may need to be added to, their health plans to comply with ERISA or other applicable law. For example, the Mental Health Parity Act and Addiction Equity Act, which generally prevents group health plans and health insurance issuers that provide mental health or substance abuse benefits from imposing less favorable benefit limitations on those benefits than on other medical or surgical benefits, may require similar travel benefits for mental health or substance abuse benefits, and this would need to be carefully reviewed.
Employers who offer health benefits to employees covered by a collective bargaining agreement will want to consider bargaining obligations. Employers with remote work forces may need to determine which state laws affect employees working remotely.
The state laws on abortion are expected to keep changing, so employers will want to continue to consider and monitor changes in the laws in the states in which employees and their dependents live.
Federal Anti-Discrimination Laws Extend to Pregnancy-Related Conditions
Federal anti-discrimination laws prohibit employers from treating employees differently on the basis of whether they have had, are seeking, or choosing not to have an abortion. While the decision in Dobbs stated that a state’s regulation of abortion “is not a sex-based classification,” numerous federal courts and the Equal Employment Opportunity Commission (EEOC) have uniformly concluded that abortion falls under the umbrella of pregnancy discrimination.
It is well established that Title VII of the Civil Rights Act of 1964 protects employees from being fired for having an abortion or contemplating having an abortion. 42 U.S.C. § 2000e(k); Doe v. C.A.R.S. Protection Plys, Inc., 527 F.3d 358, 364 (3d Cir. 2008); Turic v. Holland Hospitality, Inc., 85 F.3d 1211, 1214 (6th Cir. 1996). Title VII also makes clear that an employer is not required to pay for health plan benefits for abortion except where (1) the life of the mother would be endangered if the fetus were carried to term, or (2) where medical complications have arisen from an abortion. 42 U.S.C. § 2000e(k). However, nothing in Title VII precludes an employer from providing abortion benefits. Id.
There are limited exceptions for religious institutions or organizations (such as churches or synagogues), but generally employers cannot discriminate on the basis of an employee having or considering having an abortion for religious reasons.
Relatedly, the Pregnancy Discrimination Act (PDA) prohibits discrimination based on pregnancy, childbirth, or related medical conditions. The PDA establishes two fundamental requirements:
- An employer may not discriminate against an employee on the basis of pregnancy, childbirth, or related medical conditions; and
- Women affected by pregnancy, childbirth, or related medical conditions must be treated the same as other persons not so affected but similar in their ability or inability to work.
Accommodations and Medical Leave
While pregnancy is not a disability under the Americans with Disability Act (ADA), an employee experiencing a pregnancy or abortion-related condition that renders them temporarily disabled may qualify for accommodation or leave under the ADA. If this situation arises, employers should engage in the normal interactive process for determining accommodations.
The PDA requires employers to make reasonable accommodations for pregnant workers (so long as such accommodations are offered to other employees with similar limitations). Accordingly, the EEOC has advised that a worker who requires accommodation due to pregnancy should be afforded accommodation or unpaid leave “to the same extent that other employees who are similar in their ability or inability to work are allowed to do so.”
Employees of companies with 50 or more employees may also seek to take time off related to pregnancy or abortion under the Family and Medical Leave Act (FMLA).
Whether any of the above types of leave are job-protected depends on the circumstances and the policies of each employer. For example, Title VII does not require employers to provide pregnancy-related, job-protected leave if it does not provide the same kind of leave for other temporary illnesses or family obligations. And laws in individual states also might provide additional protections around taking medical leave related to a pregnancy or abortion. Employers should discuss their individual situations with counsel.
Storing Medical Information
Any information gathered about an employee’s health must be kept separate from their general employment file and treated as a confidential medical record. In providing information to the workforce about policy changes related to state abortion laws, it is important to do so without disclosing the names of any affected employees.
Aiding & Abetting Liability
A number of states with laws restricting or limiting abortion—including Alabama, Kentucky, Louisiana, Mississippi, North Dakota, Oklahoma, Texas, and South Carolina—purport to impose liability on people or entities that assist people in obtaining an abortion. While it is not yet clear the extent to which employers might be liable for “assisting” employees who wish to obtain an abortion, employers should consult with counsel regarding the implications for actions around this issue in the various states with restrictions or bans.
Conclusion
State laws restricting or banning abortion (and the federal government’s response to them) continue to develop and change rapidly, and staying abreast of the issues at this stage is key to avoiding legal missteps if and when this becomes an issue in your area. Please feel free to contact the attorneys listed on this Advisory for further guidance or analysis.
© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
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