Want to Offer Abortion-Related Benefits to Employees? What Small Business Owners Need to Know After Roe v. Wade Reversal

With the Supreme Court’s recent overturning of Roe v. Wade, employers are left with more questions than answers as to their options to provide certain benefits related to abortions and the potential risks.

The following provides a brief overview of the various issues that employers will need to consider in deciding whether to make changes to their benefit programs in light of the Supreme Court’s ruling:

• State Law. Each state now has the ability to set its own restrictions with respect to abortion without considering any constitutional privacy limitations. In essence, this allows states to implement laws that significantly curtail the availability of abortion services. For employers that operate in multiple states and offer coverage for abortion services, it will be imperative that employers understand the applicable state laws addressing both the restrictions on abortion services and the effect of those laws on the coverage provided under the employer’s health plans, including the potential for any criminal or civil enforcement.

• Health Plan Coverage. The effect of state laws on employer-provided health plan coverage will depend, at least in part, on whether the plan is fully insured (claims are paid by the insurance carrier) or self-insured (claims are paid from the general assets of the company).

• Fully insured plans will be subject to the insurance laws of the state in which the policies are issued. In this regard, if coverage for abortion services is mandated, the insurance plan products will be required to provide the coverage. If the state insurance laws prohibit/restrict the coverage for abortion services, the insured carriers will not be able to offer the coverage under policies issued in those states.

• Self-insured plans are not subject to state insurance laws, but are subject to the Employee Retirement Income Security Act (ERISA). ERISA generally preempts state laws that effect the employee benefit plans. However, depending on how the state laws are drafted, ERISA preemption may be tested.

• Travel Benefits. Many employers have gone on record to say that they will be providing travel benefits to employees and dependents for medical treatment that is not available in the state in which the employee or dependents reside. There are different ways that employers can approach this type of benefit:

• Self-funded employee health plans can add this benefit to the existing plans. Travel benefits, within certain parameters, are considered medical expenses and can be provided through the self-funded plan.

• Fully insured health plans are limited by the policies and state insurance laws and may not be able to provide this benefit. However, it may be possible that a separate self-insured health reimbursement plan can be established to provide the travel benefits to those who otherwise have major medical coverage.

• Employers could also set up a reimbursement or stipend program outside of their health plans. However, this approach could raise additional considerations as it relates to privacy and the substantiation of expenses. Reimbursements under these programs would likely be taxable to an employee as wages.