The information was provided to BJA partners by our lawyers, Maynard Cooper Gale:
In the wake of the Supreme Court’s decision in Dobbs vs. Jackson Women’s Health Organization to overturn Roe v. Wade’s limitations on state laws regarding abortion, our clients and friends have had questions about the implications of the decision on existing employee benefit plans. Some employers have asked about options for expanding or establishing benefits to cover various expenses related to abortion, including travel and lodging expenses for employees who live in states with laws prohibiting abortion.
There are many employee benefits considerations that impact the structure and approach for employers considering abortion-related benefits. As a general rule, travel and lodging
benefits can be considered benefits for medical care if the expenses are primarily for and essential to medical care. Abortions performed by a licensed medical provider would be considered medical care under Code section 213(d). Employers who wish to provide such benefits may consider covering such expenses on a taxable basis via additional taxable compensation, or doing so on a tax-free basis through new or existing health plans, EAPs, HRAs, or through new benefit plans. Although providing coverage for such abortion-related expenses should generally be permissible under federal law, each approach comes with its own considerations, including ERISA compliance and preemption, tax implications, and potential employment discrimination concerns.
Given the Biden administration’s indications that it will take steps to limit the effect of the Dobbs decision, we do not expect aggressive enforcement from federal agencies to limit the ability of employers to assist with abortion expenses. Much is still developing, however, with regard to state laws and enforcement in this area. For example, it remains unclear whether states with current or future legislation prohibiting abortions will attempt to restrict employers that assist employees with abortion-related expenses (and whether ERISA preemption may preclude such enforcement when benefits are provided under an ERISA benefit plan). Texas and Oklahoma are currently the only states with statutes explicitly prohibiting employer coverage or reimbursement of abortion services in those states through insurance or benefit plans, where such an act would be considered aiding and abetting unlawful abortion. As a result, an employer’s geographic footprint and state law enforcement risks must factor into decisions regarding abortion-related employee benefits.
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