Employer Considerations for Coverage of Abortion Benefits

June 28, 2022

Employers likely have questions about abortion-related employment protections and healthcare benefits after Friday’s SCOTUS controversial decision that overturned Roe v. Wade. Given the ruling, people in states with strict abortion limitations may end up traveling to other states to receive abortion-related care. Can employees take job-protected leave to obtain such services? What other rights might employees have under federal employment laws? Here are a few points you should keep in mind in light of the June 24 Dobbs v. Jackson Women’s Health Organization decision.

Certain states (such as Oklahoma and Texas) now enable individuals to bring civil lawsuits against anyone who assists in the performance or inducement of abortion, including paying for or reimbursing the costs of the procedure through insurance or otherwise. It is unclear whether individuals can sue companies that cover travel expenses for legal out-of-state abortions.

This Compliance Bulletin outlines the factors for employers to consider regarding providing abortion-related benefits. However, many of the issues surrounding these types of benefits remain open questions at this time. Legal challenges to these laws are already underway, and more are expected in the future.

Employers may need to closely analyze any abortion benefit offered under their group health plans to ensure full compliance with applicable restrictions. Carriers and third-party administrators may be able to provide information regarding specific plan provisions. You should consult with your employee benefits counsel to determine how to best comply with applicable federal and state laws for any decisions regarding abortion coverage and travel access.

Coverage of Abortion Benefits

There are a number of ways coverage of abortion-related expenses may be provided through a health insurance plan. Several factors may affect the benefits that are offered, such as plan funding (fully insured or self-funded), location, tax considerations and the applicable state regulation (such as whether coverage is required or prohibited).


Federal Law

Two key laws address abortion benefits at the federal level: the Pregnancy Discrimination Act (PDA), which amended Title VII of the Civil Rights Act of 1964, and the Affordable Care Act (ACA). The PDA applies to employers with 15 or more employees, including state and local governments.


Pregnancy Discrimination Act

The Pregnancy Discrimination Act (PDA) protects women from being fired for having an abortion or contemplating having an abortion. It also prohibits adverse employment actions against an employee based on their decision not to have an abortion. For example, it would be unlawful for a manager to pressure an employee to have or not to have an abortion in order to retain their job, get better assignments or stay on a path for advancement.


Insurance Coverage of Abortion

The PDA makes clear that if an employer provides health insurance benefits, it is not required to pay for health insurance coverage of abortion, except where the life of the mother would be endangered if the fetus were carried to term or medical complications have arisen from an abortion. If complications arise during the course of an abortion, the health insurance plan is required to pay the costs attributable to those complications.

In addition, an employer’s health plan is permitted to provide health coverage for an abortion, although not required. If the plan covers the costs of abortion, it must do so in the same manner and to the same degree as it covers other medical conditions. Potential problems could arise, for example, if the plan covers abortions but on different terms and conditions than those that apply to other medical conditions, or if the plan provides comprehensive medical benefits but doesn’t cover abortion when the life of the mother would be endangered if the fetus were carried to term.


Open Issue: Whether the PDA’s protections will play a role in cases involving state anti-abortion laws.


Affordable Care Act

The Affordable Care Act (ACA) does not require abortion coverage beyond what is already required under Title VII, as amended by the PDA. According to Executive Order 13535, the ACA was intended to maintain the abortion-related restrictions found in existing law (“Hyde Amendment” restrictions) at the time of the ACA’s enactment. Under the ACA, federal laws to protect conscience (such as the Church Amendment and the Weldon Amendment) remain intact, and new protections prohibit discrimination against health care facilities and health care providers because of an unwillingness to provide, pay for, provide coverage of or refer for abortions.


State Law

While there is no specific mandate or ban on covering abortion costs at the federal level, many states have passed their own regulations regarding abortion coverage. In the wake of the Dobbs decision, more states are likely to ban or restrict abortion coverage under all health plans. The scope of benefits that may be provided by a health plan will depend on the specific restrictions that are imposed at the state level. This section outlines key state law issues to consider.


Extraterritorial Jurisdiction

In states like Texas and Oklahoma that bar “aiding and abetting” the procurement of illegal abortions, it remains to be seen how these laws will apply to employers providing benefits for their employees to receive legal out-of-state abortions. While the plain text of the laws state that paying for or reimbursing the costs of abortion “through insurance or otherwise” is prohibited, it is unclear whether, and to what extent, this would apply to coverage of lawful out-of-state procedures. This type of jurisdictional issue will likely need to be decided in court.


Open Issue: The extent to which one state’s insurance laws will apply to employers’ reimbursement of travel expenses for employees to procure out-of-state abortions.


ERISA Preemption

In general, self-insured health plans are not subject to state insurance laws because of the preemption clause of the Employee Retirement Income Security Act of 1974 (ERISA). If a self-insured plan is not subject to ERISA, ERISA’s preemption clause does not apply, and the plan may be subject to state laws. Similarly, state insurance laws generally apply to ERISA-covered fully insured health plans.

ERISA preemption could potentially be used as a defense for self-insured health plans providing abortion benefits in states that regulate abortion. However, it is unclear whether a state law criminalizing the practice—or state laws that prohibit persons from “aiding and abetting” the procurement of illegal abortions—could be used against employers providing abortion benefits through self-insured, ERISA-covered plans.

Those covered under non-ERISA, self-funded health plans (Ex: public sector employers) should work with their benefits council to determine what, if any protections are afforded under the self-funded plan type.


Open Issue: Whether ERISA’s preemption provisions can be used as a defense in any potential criminal or civil case brought under state anti-abortion laws.


Employers Providing Travel Benefits

Many employers have already announced that they will provide travel benefits to employees and family members who live in states where abortion is outlawed or severely curtailed. Travel benefits for medical care are not uncommon in group health plans and can be provided tax-free up to certain limitations in the Internal Revenue Code.

Providing travel benefits outside of the group health plan to all employees raises additional tax, Affordable Care Act, and ERISA compliance issues. Therefore, you should discuss the consequences of such decisions with benefits counsel. Of course, the provision of any travel benefits should be monitored in light of the state laws that are being changed and updated across the country.


Tax Considerations

As with any employee benefit, employers will also have to analyze the tax treatment of abortion-related coverage. Legal abortions are considered a deductible qualifying medical expense (for which Health Savings Account, Health Reimbursement Account and Flexible Spending Account funds may be used on a tax-free basis). However, the open legal questions regarding reimbursing travel-related expenses for out-of-state abortions may also affect tax treatment. Employers may need to consult with a tax advisor on any questions regarding the tax implications of these benefits.


Job-Protected Leave May Be Available

Although Title VII and the PDA protect workers from employment discrimination based on their decision to have (or not to have) an abortion, additional issues involving absenteeism may arise if an employee needs time off to travel to another state for abortion-related care.

Is such leave job-protected? It depends. Title VII does not require an employer to provide pregnancy-related leave if it doesn’t provide leave for other temporary illness or family obligations, according to the EEOC. However, employees can take job-protected leave as a reasonable accommodation under federal law in some circumstances, and state laws may provide additional protections. Here are some of the federal laws that may come into play:


Pregnancy Discrimination Act

In addition to protecting workers from pregnancy discrimination, the PDA covers reasonable accommodations for pregnant workers, but only if such accommodations are offered to other employees with similar limitations. “Under the PDA, an employer must allow women with physical limitations resulting from pregnancy to take leave on the same terms and conditions as others who are similar in their ability or inability to work,” according to the EEOC. A worker who is temporarily disabled due to pregnancy should be allowed to take unpaid leave “to the same extent that other employees who are similar in their ability or inability to work are allowed to do so.”


Americans with Disabilities Act (ADA)

Notably, pregnancy alone is not considered a disability under the ADA. However, a pregnancy-related impairment may be covered by the ADA, in which case you should engage in an interactive dialogue with the employee to explore reasonable accommodations.

A pregnancy-related impairment is considered a disability if it substantially limits a major life activity (such as walking, standing, and lifting) or a major bodily function (such as the musculoskeletal, neurological, cardiovascular, circulatory, endocrine, and reproductive functions).

Therefore, an employee who is seeking an abortion due to a disability may be entitled to take ADA-protected leave in addition to what you would normally provide under a sick leave policy, unless the leave accommodation would result in an undue hardship for the business.


Family and Medical Leave Act (FMLA)

While Title VII, the PDA, and ADA apply to employers with at least 15 employees, pregnant workers at larger companies (with 50 or more employees) may be entitled to take time off under the FMLA.

Employers that are covered by the FMLA must provide eligible employees with up to 12 weeks of leave in a 12-month period for various reasons, including to address the employee’s own serious health condition. Employees with qualifying medical conditions are eligible for FMLA leave if they worked for a covered employer for at least a year and for at least 1,250 hours during the previous year.

An employee may be eligible to take FMLA leave for abortion-related care if their healthcare provider determines that they have a qualifying serious health condition. When administering such leave requests, you should follow FMLA guidelines for obtaining certification from the employee’s healthcare provider and maintaining confidentiality of the employee’s medical information.

Importantly, you should note that state laws may cover smaller businesses and provide employees with additional leave rights, as well as privacy, confidentiality, and anti-discrimination protections. Consult with local counsel to discuss the interplay between federal, state, and local employment laws.

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