After the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, many employers have added enhanced travel and lodging benefits to their group health plans. By doing so, employers seek to provide reimbursement for travel and lodging if a participant or dependent must travel a certain distance to obtain abortion services. This article examines the legal framework governing travel and lodging benefits in group health plans, including the Employee Retirement Income Security Act of 1974 (ERISA), the Affordable Care Act (ACA), and the Internal Revenue Code (the Code).
At issue in the Dobbs case was whether the Mississippi Gestational Age Act, the Mississippi law that prohibits nearly all abortions after fifteen weeks (i.e., permitting them only prior to fetal viability), was permitted under the Constitution. Prior Supreme Court precedent, including Roe v. Wade (Roe), and Planned Parenthood of Southeastern Pa. v. Casey (Casey), had held that a woman has a constitutional right to an abortion, and states could not prohibit abortion prior to fetal viability.
The Dobbs court disagreed, holding that:
Under this new legal framework, the Mississippi Gestational Age Act was upheld as constitutional. Since the Dobbs opinion was issued, abortions in nearly all instances have become effectively banned in many states, and many states ban abortion prior to fetal viability.
This article outlines the specific considerations that employers face when amending their group health plans to provide travel and lodging benefits as described above.
Prior to Dobbs, many self-funded group health plans already provided travel and lodging benefits when travel was required for certain medical conditions, most commonly organ transplants. In the wake of Dobbs, many employers have enhanced these travel and lodging benefits to cover travel and lodging related to abortion services. For example, a common plan provision is providing up to $4,000 to pay for travel and lodging expenses in the event a participant or dependent must travel over 50 miles to obtain an abortion.
Some employers have expanded the travel and lodging benefit more broadly to provide travel and lodging benefits to any covered medical or behavioral health service, if the participant cannot access such covered service from a local provider within 50 miles from their home or within the state they reside.
Self-insured group health plans that are sponsored by private-sector employers, and multiemployer trusts, are typically governed by ERISA. Due to ERISA’s broad preemption of state law, self-funded ERISA plans are not subject to the state health insurance laws; accordingly, they have greater flexibility in plan benefit design. (The extent to which ERISA preemption will apply to state abortion laws that contain civil and/or criminal aiding and abetting provisions is addressed in Considering ERISA Preemption of State Laws Following Dobbs v. Jackson Women’s Health Organization in this issue.)
Employers who only offer fully insured medical benefits are faced with less straightforward options than those that offer a self-funded plan. Fully insured plans are subject to state insurance laws; accordingly, fully insured plans offered in states with abortion bans will not cover abortion services, and employers have no control over plan design.
Employers with fully insured plans who wish to cover abortion services and related travel and lodging benefits may consider creating a Health Reimbursement Arrangement (HRA) that would cover abortion services and reimburse associated travel and lodging benefits. An HRA is an employer-funded arrangement that reimburses employees for certain medical care expenses incurred by employees and their dependents. An HRA must be paid solely by the employer. An HRA is considered to be a self-funded group health plan under applicable federal laws. Accordingly, an HRA is subject to the ACA market reform requirements (e.g., coverage of preventive care with no cost-sharing, prohibitions on annual/lifetime limits for essential health benefits). Because by its very nature, an HRA cannot comply with these ACA requirements, it must be “integrated” with the employer’s medical plan to be a compliant group health plan. There is specific IRS guidance addressing the rules regarding integration. Generally, this means that only those employees (and dependents) who are covered by an employer’s group health plan or are covered by another employer’s group health plan (such as through a spouse or parent’s employer) can be covered by the HRA. The HRA could pay for abortion services and reimburse for associated travel and lodging expenses.
Offering an HRA that covers abortion services and travel and lodging expenses is more complicated if the employer also offers a high-deductible health plan (HDHP), as an employee’s participation in the HRA could cause the individual to be ineligible to contribute to a health savings account (HSA) until the HDHP’s annual deductible has been met. This means that coordination between the health insurer and the vendor that administers the HRA will be required to ensure that the HRA does not pay for any benefits prior to the HDHP deductible being met. Insurers in states with abortion bans may be unwilling to coordinate with an HRA vendor for this purpose.
In general, a group health plan can only reimburse, on a non-taxable basis, “medical care” as that term is defined under Internal Revenue Code Section 213(d). The following is considered “medical care” under the Code:
We note that meals that are not provided at a hospital or similar institution are not considered medical care under the Code.
In conclusion, plan sponsors of self-funded group health plans have more flexibility in amending their plan to provide for travel and lodging benefits to obtain abortion services, but need to be mindful of applicable IRS rules and limits. Plan sponsors of fully insured plans will face more difficulty in trying to offer these benefits and will likely need to engage outside vendors to assist in administering the benefit.
