Protecting privacy and managing employee health benefits

Following the Supreme Court decision to overturn Roe v. Wade, employers have now been dragged into the abortion fight.
0922 Editorialcontent Abortion Feat

When the U.S. Supreme Court (SCOTUS) issued its decision in Dobbs v. Jackson Women’s Health on June 24 of this year, it overturned two prior precedents, the landmark Roe v. Wade case and Casey v. Planned Parenthood. The decision — while expected, thanks to a leaked draft opinion from Justice Samuel Alito earlier in the spring — still sent shockwaves across the nation.

However, with more than half of states expected to immediately or in short order ban abortion, the issue, which has been a political hot button for more than 50 years, quickly turned into a human resources quagmire for American businesses that now must contend with decisions concerning access for women employees to safe abortions in states that still allow it, as well as serious concerns over the privacy of health care decisions, which the original Roe decision in 1973 upheld under the 14th Amendment.

Once that SCOTUS ruling was made at the end of June, several prominent companies — Amazon, Disney, Apple, and JP Morgan among them — vowed to cover travel costs for employees who live in states where the procedure is now illegal so they can terminate pregnancies. They join other companies like Patagonia, Yelp, and Microsoft that already covered abortion or abortion travel under their health plans.

Quickly, pundits speculated that red states could also face a brain drain of sorts, as women professionals and business leaders and owners who support abortion rights could pick up and move to states where abortion remains legal. It’s an issue that Wisconsin needs to pay close attention to. While Democrat Tony Evers currently sits in the governor’s office, the state legislature is solidly Republican, and Evers is expected to face a stiff challenge from Republican nominee Tim Michels in the Nov. 8 general election.

Aside from politics, when the Supreme Court voted to overturn Roe, Wisconsin reverted to an 1849 state law that makes performing an abortion a felony with one exception — when deemed “necessary, or is advised by two other physicians as necessary, to save the life of the mother.” The penalty for performing an abortion in Wisconsin under the law is up to six years in prison and a fine of as much as $10,000.

State Attorney General Josh Kaul immediately said he would not enforce the ban, and doubled down in the days following the Supreme Court’s decision in June by filing a lawsuit in Dane County Circuit Court to block the ban, citing a 1985 Wisconsin state law that prohibits abortions after a fetus has grown enough that it could survive outside the womb — that point in time is the subject of debate; some physicians say it’s around 20 weeks, others say it’s around 28 weeks.

Kaul argues that the 1985 law supersedes the 1849 ban and as such abortions before the point of viability remain legal in Wisconsin. He further contends that the ban should be declared unenforceable because it has become obsolete, saying a law that was enacted so long ago it “cannot be said to have the consent of the governed.”

Regardless, for now, abortion remains illegal in the state of Wisconsin.

Where to from here?

A prominent business leader told IB in July that they don’t see the SCOTUS ruling impacting Wisconsin’s workforce negatively because surrounding states, like Illinois and Minnesota, will still permit legal abortions and many businesses have already announced their intention to pay for women to get an abortion out of state.

That may prove true, but already the notion has its detractors, especially when it comes to recruiting workers to the state.

David Williamson Shaffer, an education professor at the University of Wisconsin–Madison, told the Los Angeles Times that quality of life is a major issue in recruitment discussions. He successfully hired a candidate last year who was also being wooed by Stanford and Harvard.

“We spent a lot of time discussing the quality of life here,” Shaffer told the Times. “As somebody who does recruiting, I have to look someone in the eye and tell them I think this would be a good place to come.”

Today, Shaffer says, “I’m not entirely sure I could do that with somebody who was of the age where they were thinking about having children. I would have to be honest with someone even if they were past that stage of life, about what the consequences would be in terms of health care coverage. It would absolutely come up in the discussion, and it would absolutely be a problem the next time I have to recruit someone.”

According to Kathryn Mayer of Human Resource Executive magazine, “The overturn will hit the corporate world hard in many ways and will force employers to decide how to handle their medical coverage, other benefits, company response, employee communication, and more.

“Employers will have to examine their health and benefits coverage to see how the Roe reversal might affect abortion coverage, and they’ll have to decide if they want to expand benefits to help employees access abortions,” Mayer notes. “Employers that do expand coverage — by providing travel benefits so that workers can get the procedure in a state where it is legal, for instance — may have to navigate state-by-state laws that could affect such benefits and deal with employee privacy issues.”

In the short term, Mayer says, employers should examine their health and benefits coverage to see what’s covered regarding abortion procedures and decide if they would like to make changes.

“Industry insiders say it’s best for company and HR leaders to take the pulse of their workforce to understand where the majority of their employees stand on the issue,” explains Mayer. “If they find abortion is an issue employees feel passionate about and the company is not doing anything, that will likely have a negative impact on company culture and morale.

“Abortion travel benefits, so far, are the most common benefits being added by big-name employers,” continues Mayer. “However, due to the benefit’s high cost, the challenges of implementing and managing it, as well as questions around privacy for workers who take advantage of the offering, other employers might have to rethink benefits coverage in other ways to help, if they choose to do so. That is especially true for smaller or midsize firms that do not have the budget of their larger counterparts.

“In light of these and more concerns, companies may offer other support, like providing health savings account contributions for employees to use to access abortions if needed,” Mayer concludes. “More robust paid leave, flexible schedules, paid parental leave programs, child care benefits, and adoptive benefits may all come into play as well.”

Considerations for employee benefit plan sponsors

Considering the shifting legal landscape, many employee benefit plan sponsors are looking for guidance on how the SCOTUS decision on Dodd will affect health plan coverage of abortion and how best to respond to the Court’s ruling and the expected patchwork of laws governing abortion.

Attorneys Paul Beery, Stacie M. Kalmer, and Gregory A. Storm with Reinhart Boerner Van Deuren s.c., which has offices in Madison, Milwaukee, Waukesha, and Wausau, as well as in Illinois, Minnesota, Colorado, and Arizona, provided the following legal perspective on how the ruling may impact employee health benefits.

As an initial matter, 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 abortion coverage 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.

As a general rule, the Employee Retirement Income Security Act of 1974 (ERISA) preempts all state laws that relate to or have an impermissible connection with employee benefits plans. Therefore, any state law that specifically prohibits or mandates abortion coverage under an employer-sponsored group health plan would be seemingly preempted for plans subject to ERISA.

However, ERISA does not preempt generally applicable criminal law. This exception is most often applied for criminal conduct such as fraud, embezzlement, and larceny, but not for laws specifically directed at employee benefit plans. Many states’ statutes prohibiting abortion make unlawful abortion a crime, and several others (e.g., Texas and Oklahoma) go one step further by criminalizing “aiding and abetting” the performance of an illegal abortion.

As such, it is unclear whether ERISA preemption will provide a complete shield in the event a plan sponsor elects to make abortion coverage available in a state with wide reaching criminal laws related to abortion. Commentators and industry leaders agree that the preemptive effect of ERISA on state abortion laws will be litigated in the near future, but clarity on this issue may take years to achieve. Accordingly, if plan sponsors wish to provide some sort of abortion related assistance through employee benefits, those sponsors should ensure that they are comfortable with a level of legal uncertainty.

Sponsors of self-funded plans should first review their current plan provisions for coverage for 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 changes are necessary due to state legal requirements.

If comfortable with the legal risks, plan sponsors that already cover abortion could continue providing that coverage without change. In addition, plan sponsors could amend their plans to provide abortion coverage under the medical benefit. Plan sponsors might also consider expanding pharmaceutical coverage to include prescription abortion medication such as mifepristone and misoprostol. To this point, abortion medications have taken a backseat to more traditional surgical abortions among state legislatures. However, plan sponsors should be prepared for rapid changes in the regulatory landscape if states move to enact restrictions on pharmaceutical abortion, which may affect health plan coverage decisions.

Plan sponsors could also consider adding a travel benefit to allow covered individuals access to abortion services if they live in a state where abortion is prohibited. Travel benefits could be provided in a number of ways, including group health plans, health reimbursement arrangements (HRAs), employee assistance programs (EAPs), and taxable reimbursement programs, and each option has pros and cons. An EAP and a taxable reimbursement program limited to medical travel would still be considered ERISA benefits and, as such, would require additional administration. Further, an EAP would need to qualify as an “excepted benefit” in order to satisfy ACA requirements.

Therefore, for the following reasons, the direct group health plan coverage and HRA reimbursement seem to be the most viable options.

  • Group Health Plan Coverage — Plan sponsors may be able to provide travel-related benefits under currently existing group health plans, which would allow the sponsor to implement the benefit with minimal administration changes. Furthermore, travel-related expenses may not be considered “essential health benefits” under state benchmark plans, which would allow sponsors to cap total travel benefits at a certain dollar amount. However, plan sponsors should also consider the risk under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) of providing travel benefits for medical/surgical procedures and not mental health and substance use disorder treatment. One way to address the MHPAEA concern could be to provide a generally applicable travel benefit that would apply to any covered service under the plan. The limits under section 213 of the Internal Revenue Code (the Code) for reimbursement of medical related travel (e.g., $50 per night for lodging) would apply, but plan sponsors could provide a more robust taxable benefit.
  • Health Reimbursement Arrangement Coverage — Plan sponsors could also provide reimbursement for travel and lodging expenses through an integrated HRA. However, as a group health plan, an HRA would have similar issues as the direct group health plan coverage, and an HRA would have startup and administrative costs if the sponsor does not already have one in place. Any reimbursement provided through an HRA would be subject to the limits under Code section 213, without the ability to provide the greater taxable benefit.

Some sponsors may wish to use an EAP or taxable reimbursement program in an effort to provide coverage for employees not enrolled in the sponsor’s group health plan. However, using these methods may create substantial administrative difficulties and compliance concerns. Therefore, plan sponsors who are interested in providing a travel benefit should contact qualified legal counsel to determine which method would be appropriate for their current benefit structure.

After plan sponsors have determined how they want to provide abortion coverage, they should coordinate with their service providers (e.g., third-party administrators, pharmacy benefit managers, and telehealth providers) to determine whether they are capable of administering these employee benefits.

Not all related vendors will facilitate abortion-related coverage for any number of reasons. For example, state laws could potentially impact the ability of telehealth providers to prescribe medication and/or prescribe medication across state lines. Furthermore, while many administrators are moving quickly to respond to recent legal developments, it might be some time before abortion-related administrative services are widely available.

Fallout from SCOTUS ruling: By the numbers

An analysis from the National Partnership for Women & Families finds that millions of women living in the 26 states where abortion is banned or likely to be banned will be impacted because of the recent Supreme Court decision on Dobbs v. Jackson Women’s Health Organization that reversed Roe v. Wade.

Thirty-six million women of reproductive age live in these states, but the nearly 15 million Black and Native American women there are most likely to be impacted by the bans. Women with disabilities, women veterans, and women who are economically insecure are also disproportionately likely to live in these states.

Here is a breakdown of the data:

  • 8 million are women with disabilities;
  • 6 million are women who are economically insecure;
  • 8 million are mothers with children at home;
  • 389,600 are veterans; and
  • 8 million are women of color including:
    • 8 million Black women;
    • 5 million Latinas;
    • 3 million Asian women;
    • 34,300 Pacific Islander women;
    • 285,500 Native American women; and
    • 908,200 multiracial women.

In Wisconsin, there are approximately 1,262,500 women of reproductive age. Of those, 558,000 are mothers, 365,800 are women who are economically insecure, 9,000 are women veterans, and 87,900 are women with disabilities.

Economist Caitlin Knowles Myers estimates that in the first year after the Dobbs decision, 100,000 pregnant women will not be able to have the abortion they seek, resulting in 75,000 births that will dramatically impact their lives, plans, and economic security. For Black and brown people, giving birth presents its own set of dangers and concerns given their high rates of maternal mortality, especially in the states that also restrict abortion the most.

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