Employers Should Beware of Compliance Issues with Abortion Benefits
The recent Supreme Court ruling on abortion has left many employers scrambling to understand the impact it will have on their ability to provide health coverage for their employees.
The ruling, which effectively reversed Roe v. Wade, means that states are now free to restrict or even end access to abortions.
In response, some employers are offering coverage for employees to travel out of state for abortions. This is a complicated issue, and employers must be aware of the potential compliance and liability issues before moving forward.
Are You Fully Insured or Self-Insured?
When it comes to abortion-related benefits, self-insured employers might have more wiggle room in restrictive states, depending on how courts will view the interaction between the Employee Retirement Income Security Act (ERISA) and state statutes. The advantage is that they can customize what coverage they offer.
On the other hand, non-grandfathered, fully insured small-market plans are obligated to conform to their state's definition of essential health benefits and provide coverage accordingly. As a result, employers can only offer the coverage carriers are legally permitted to provide, which might not cover abortion-related benefits in some states. Experts recommend providing stand-alone health reimbursement arrangements (HRA) as an alternative.
In many states, abortion has been included on the list of essential health benefits, and others might follow suit. Some might even add abortion-related travel benefits to the list.
Self-insured employers could change the coverage they provide to include travel expenses and abortion providers outside of the network.
An option for fully insured employers would be to switch to a self-insured model, but that might not be feasible for businesses with few employees. However, a self-funded plan would give employers more customization options.
Travel and Tax Considerations
Employers need to be aware of the tax implications of employee travel reimbursements. Generally, reimbursements will be taxable compensation unless they qualify as medical expenses. Depending on what is reimbursed, some costs might qualify as medical care, but not all. To comply with the Affordable Care Act, reimbursements that qualify as medical expenses must be integrated with the business' group health plan.
Get Everyone on Board
Experts recommend that employers review any plans that provide abortion-related coverage to ensure compliance, as laws vary from state to state and access to medical treatment can differ. This is especially critical for multistate firms.
Companies should also consider talking to their medical carriers, third-party administrators (TPA), and employee assistance programs (EAP) about the abortion-related travel and lodging benefits they can provide. Some companies are also looking for solutions that don't rely on what their carriers or TPAs can do, such as setting up hardship funds or lifestyle accounts to cover the cost of travel and lodging without being restricted by their health plan.
Other issues employers should consider seeking expert legal advice for include:
- ERISA and tax code limitations: While group health plans can cover transportation for medical care, problems can arise if coverage is offered separately from the plan and exceeds IRS limits.
- Mental health parity and nonquantitative treatment limits: Compliance issues could arise if the travel benefit is included in the health plan but not provided for mental health or substance use disorder care that is not locally accessible.
- Privacy protection: Group health plans are subject to HIPAA privacy and security rules. A business associate agreement may be necessary when a new vendor is added. Travel and lodging benefits offered outside of the plan may have to abide by other privacy laws.
Employers might also consider exploring other options, such as telemedicine, women's health services, or healthcare navigation. Instituting policies to provide time off or leave for women who have to travel to get the care they need should also be considered.
Using Spending Accounts
Specialists advise employers to consider reimbursing abortion travel through health reimbursement arrangements (HRA), health savings accounts (HSA), or health flexible spending accounts (FSA). If opting for an HRA or FSA, expenses will require supporting evidence that the abortion was performed, which is not the case for an HSA as individuals are expected to maintain their own records.
Risk of Liability
Employers should be cautious about changing the group health plan to offer abortion-related travel coverage if they are in a state where abortions are illegal, as this could expose them and their employees to legal risks.
In Texas, for example, most abortions are now banned after six weeks, and private citizens can sue any person aiding or abetting a prohibited abortion. So, experts warn that employers offering abortion-related travel benefits may face legal action.
What Should Employers Consider?
Experts advise businesses wishing to provide their employees with abortion-related benefits to consider evaluating their provider's network. If it's limited, it might be possible to extend in-network access or add a benefit for out-of-network treatment so employees can get an abortion in states where it is still legal. Secondly, employers should consider adding travel and lodging coverage under their existing plan, as the IRS sees abortions as medical care, so associated costs are classed as medical expenses.
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