Dobbs: Considerations for Plan Sponsors After Retirement – Employee Benefits and Compensation

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On Friday, June 24, 2022, the United States Supreme Court released its decision in Dobbs v. Jackson Women’s Health. Overturning two previous precedents, Roe vs. Wade and Casey Against Planned Parenthoodthe Dobbs This decision allows states to regulate and/or prohibit access to abortion at any stage of pregnancy. As a result of this ruling, at least 26 states are expected to ban or severely restrict access to abortion.

Given the changing legal landscape, many employee benefit plan sponsors are asking for guidance on how the ruling will affect health plan abortion coverage and how best to respond to the Court’s decision and the expected patchwork of laws governing abortion. Below, we discuss several of the more immediate considerations.

At first, the impact of the Dobbs decision depends in part on whether the sponsor’s health plan is fully insured or self-funded. Fully insured plans are subject to state insurance law and as such may not provide coverage for abortion in states where abortion is prohibited. Meanwhile, self-funded plans are not subject to state insurance laws, providing more flexibility when designing and implementing abortion coverage.

ERISA preemption

Generally, the Employees Retirement Income Security Act of 1974 (ERISA) supersedes all state laws that pertain or have an impermissible connection to employee benefit plans. Therefore, any state law that specifically prohibits or mandates abortion coverage under an employer-sponsored group health plan would apparently be preempted for plans subject to ERISA.

However, ERISA does not precede generally applicable criminal law. This exception is most often applied for criminal behavior such as fraud, embezzlement, and theft, but not for laws dealing specifically with employee benefit plans. Many states’ abortion laws make illegal abortion a felony, and several others (e.g., Texas and Oklahoma) go even further by criminalizing “aiding and abetting” abortion. performing an illegal abortion.

As such, it is unclear whether the ERISA preemption will provide full protection in the event that a plan sponsor chooses to make abortion coverage available in a state with extensive criminal abortion laws. . Commentators and industry leaders agree that the preventative effect of ERISA on state abortion laws will be challenged in the near future, but clarity on this issue may take years to reach. . Therefore, if plan sponsors wish to provide any sort of abortion-related assistance through employee benefits, these sponsors must ensure that they are comfortable with a level of legal uncertainty.

Health plan coverage

Sponsors of self-funded plans should first review their plan’s current provisions for coverage of abortion-related services. Many plans may already include a limited abortion benefit due to interpretations of the Pregnancy Discrimination Act. A thorough review of their plan should help sponsors determine if any changes are necessary due to state legal requirements.

If they are comfortable with the legal risks, plan sponsors that already cover abortion could continue to provide that coverage without change. In addition, plan sponsors could modify their plans to provide coverage for abortion as part of the medical benefit. Plan sponsors could also consider expanding pharmaceutical coverage to include prescription abortifacient drugs such as mifepristone and misoprostol. At this point, abortion drugs took precedence over more traditional surgical abortions among state legislatures. However, plan sponsors should be prepared for rapid changes in the regulatory landscape, as states may enact corresponding restrictions on medical abortion, which may affect health plan coverage decisions.

Travel expenses

Plan sponsors might also consider adding a travel benefit to allow covered individuals to access abortion services if they live in a state where abortion is banned. Travel benefits could be provided in a number of ways, including group health plans, health care reimbursement arrangements (HRAs), employee assistance programs (EAPs), and taxable reimbursement programs, and each option has advantages and disadvantages. An EAP and taxable reimbursement program limited to medical travel would still be considered ERISA benefits and as such would require additional administration. In addition, an EAP should be considered an “excluded benefit” in order to meet ACA requirements. As such, direct group health plan coverage and HRA reimbursement appear to be the most viable options.

  • Group health plan coverage. Plan sponsors may be able to provide travel benefits under existing group health plans, which would allow the sponsor to implement the benefit with minimal administrative changes. Additionally, travel-related expenses may not qualify as “essential health benefits” under state benchmark plans, which would allow sponsors to cap total travel benefits at a certain amount. dollar amount. However, plan sponsors must also consider the risk under the Mental Health Parity and Substance Abuse Equity Act of 2008 (MHPAEA) of providing travel benefits for medical procedures. /surgical and not for the treatment of mental health and addiction disorders. One way to address the MHPAEA’s concern could be to provide a generally applicable travel allowance that would apply to any service covered by the plan. Limits under Section 213 of the Internal Revenue Code (the Code) for medical travel reimbursement (for example, $50 per night for lodging) would apply, but plan sponsors could provide a benefit taxable more robust.

  • Health Reimbursement Agreement Coverage. Plan sponsors could also reimburse travel and accommodation expenses through an integrated HRA. However, as a group health plan, an HRA would have similar issues as the group health plan direct coverage discussed above and an HRA would have start-up and administration costs in the event that the sponsor would not already have one in place. Further, any reimbursement provided through an HRA would be subject to the limitations in Code Section 213, without the ability to provide the highest taxable benefit.

Some promoters may wish to use an EAP or taxable reimbursement program for the purpose of providing coverage to employees not enrolled in the promoter’s group health plan. However, using these methods can create significant administrative difficulties and compliance issues. Therefore, we recommend that plan sponsors wishing to provide travel compensation contact qualified legal counsel to determine which method would be appropriate for their current compensation structure.

Service Provider Considerations

Once plan sponsors have determined how they wish to provide abortion coverage, they should coordinate with their service providers (for example, third-party administrators, pharmacy benefit managers, and telehealth providers) to determine whether they are able to administer these benefits. Not all vendors will facilitate abortion-related coverage for a number of reasons. For example, state laws could impact the ability of telehealth providers to prescribe medications and/or prescribe medications between states. Additionally, while many administrators are moving quickly to respond to recent developments, it may take some time before abortion-related administrative services are widely available across the country.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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