FAQ: The Impact of Dobbs v. Jackson

On June 24, 2022, the Supreme Court reversed 50 years of legal precedent by ruling that the right to an abortion is not Constitutionally guaranteed and therefore subject to state-level jurisdiction on availability and legality of services. This means that states now govern the regulation and availability of abortion services.

The ruling, made in the case of Dobbs v. Jackson Women’s Health Organization, will likely lead to a wide array of new rules, from those making abortion services illegal to those protecting and potentially expanding access to services. Some laws and regulations may contradict others passed in different states. These new regulations will have a noted impact on the design and implementation of health insurance and accompanying healthcare reimbursement accounts both immediately and over time.

So where do we go from here? While it will likely take years to understand the full, state-by-state impact of the Dobbs ruling, employers are expressing interest in addressing the needs of their employees in the immediate aftermath of the decision. This FAQ provides answers to the questions you and your customers may have regarding the Dobbs ruling and its impact on reimbursement accounts.

Frequently Asked Questions

The following answers are provided in consultation with ERISA attorney Jason Lacey, managing partner at Foulston Siefkin LLP, to help employers address the immediate needs of their employees. These questions and answers are meant purely for guidance. Please consult your own legal counsel before launching a benefit program related to this topic or any other.

Are abortion services still a covered medical expense in health plans and reimbursement accounts?

Short answer: It depends on the kind of medical coverage a citizen has and how they obtained it – individual/ACA coverage, a self-insured employer, or a fully insured employer. More on these distinctions below.

There are many details yet to be determined on the eligibility of abortion services as a covered medical expense. These questions and answers are rooted in how existing federal regulation will interact with new state regulations. Two of the main federal regulations are:

  • ERISA – The federal law that governs a medical plan sponsor’s obligations to its customers will likely, at least until other court decisions may rule differently, supersede a state’s prohibition on providing abortion services as a covered medical expense under a plan governed by ERISA. A key determining factor of ERISA jurisdiction is whether an employer’s health plan is self-insured or fully insured (more on that below).
  • Section 213(d) – This section of the federal tax code specifies which medical procedures and supporting services are considered eligible expenses for tax-advantaged accounts (HSAs, FSAs, HRAs). Abortion services lawfully obtained remain an expense for medical care under Section 213(d). This means that, regardless of whether abortion services are covered by a health plan, they are still eligible for reimbursement through CDH accounts (see table below for details).

What has changed legally with this decision?

The 50 years of law derived from the Roe v. Wade decision made abortion a Constitutionally protected right, which was governed at the federal (national) level. Over the years, other cases have changed the extent and nature of that Constitutional protection but abortion itself could not be outlawed in any state or U.S. territory. The Dobbs decision flips that understanding by asserting that abortion is not a Constitutionally-protected right under federal law and therefore can be regulated – and outlawed – at the state level. In other words, governance around the regulation of abortion has largely shifted from the federal government to each individual state government – instead of one federal law, we will see 50 individual laws, as well as existing regulation at the federal level, subject to possible future legislation at the federal level.

Is it permissible for employer-sponsored plans to provide coverage for abortion services?

  • Self-Insured Plans – These are plans where the employer is also the “sponsor” (i.e., they assume responsibility for paying all claims, generally using a mix of employer funds and employee contributions). Although there may be “stop loss” insurance in place to limit the employer’s risk exposure, benefits are not provided through a group insurance policy issued by an insurance company.
    • It’s generally still permissible to cover abortion services for self-insured plans that are covered by (federally administered) ERISA regulations. This would include most private-sector self-insured health plans (plans maintained by churches and governmental entities are not subject to ERISA). For self-insured health plans governed by ERISA, ERISA will preempt any state law that purports to limit or regulate what benefits may be provided under the plan.
    • It may be advisable to limit abortion services to those lawfully obtained, i.e., if an employee lives in a state where abortion services have been greatly reduced or eliminated, a self-insured plan should only make such services reimbursable for legally obtained services in another state. Many plans already have a general exclusion for services that are not lawfully provided.
    • Non-ERISA plans should consider applicable state law before determining eligibility of abortion services, as ERISA will not preempt state law in the context of non-ERISA plans.
    • For more on legality at the sponsor and/or employer level, see the later discussion on “aiding and abetting” and other state issues.
  • Fully Insured Plans – These plans are generally sponsored by health insurers and are approved and regulated at the state level rather than via ERISA.
    • These plans will continue to be governed by state law, so a state-by-state analysis will be needed to determine eligibility of abortion services, including travel benefits, as reimbursable expenses.
    • State insurance law is not preempted by ERISA, even for ERISA plans. This means that an insurance policy issued in connection with a plan providing fully insured coverage will need to comply with the benefit mandates and other state insurance laws applicable to the policy. Typically, an insurance policy issued in a particular state must comply with the insurance laws of that state. For example, if an employer obtains its group insurance policy in a state where state law prohibits insurers from covering elective abortion services, those services will be excluded for all employees covered by the policy, which may include employees living in another state where abortion services are not restricted (or are even protected). It remains unclear to what extent the state insurance laws of a state other than the state where an insurance policy is issued may be applied in an “extraterritorial” manner to regulate the insurance policy. For example, if an insurance policy is issued in State A where it is permissible to cover all types of abortion services, but it insures employees living in State B where it is impermissible to cover abortion services, it is unclear whether State B may require the insurer to limit coverage of abortion services for employees living in State B.

Are travel expenses related to obtaining abortion services still permissible?

Yes, it is generally permissible for employer-sponsored plans to provide coverage for abortion-related travel. It is similar to the considerations for coverage of abortion services themselves. However, as with the considerations for ERISA and non-ERISA plans, covering travel expenses has some nuances and compliance considerations, as further detailed in these FAQs.

In particular, travel expenses related to any medical need is considered medical care itself. A plan that provides or reimburses medical care qualifies as a “group health plan,” which means it is subject to the rules governing group health plans. These rules apply whether the coverage is taxable or tax-free, and whether it’s offered through a health plan (HSA, FSA, HRA) or independently of one (such as through an LSA – lifestyle spending account). Additionally, for coverage of travel expenses that is intended to be tax-free, conditions and limitations apply in determining when coverage is tax-free.

View more answers to frequently asked questions regarding the impact of Dobbs v. Jackson on reimbursement accounts below:

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