Plan sponsors have options in wake of Dobbs, but must be cautious
Reproductive rights and benefits plan experts suggest plan sponsors move cautiously before converting individual actions and decisions into plan policies.
Interviews with reproductive rights and benefits plan experts suggest plan sponsors may want to move cautiously before converting individual actions and decisions into plan policies. Clearly, there are cases involving pregnant plan members where timely decisions are of the essence, but sponsors will be well served to await further developments, especially at the state level, before staking out a position in certain key areas.
The landscape is complicated and evolving. Sponsors must take into consideration their status as either self-funded or fully insured, as well as plan demographics, applicable state and federal law, and ERISA. Are there workarounds to reimburse employees without making an insurance claim?
The Business Group on Health began fielding inquiries from members almost immediately following the court’s landmark ruling. Meeting with the U.S. Secretaries of Labor and Health and Human Services, and with representatives from the U.S. Treasury Department, BGH was asked to inform the departments about “the concerns, challenges and need for guidance or other assistance as health plans experience and adjust to the changes arising from the Supreme Court’s Dobbs decision.”
Based on their members’ feedback, the group sent a letter to the departments. Their response outlined four main areas of concern.
- The departments should protect plans and individuals by: “Supporting and defending ERISA preemption to the greatest extent possible. ERISA’s broad preemption provisions offer strong federal legal protection for employer plans against state overreach. The departments must act now to ensure that ERISA serves as a deterrent against destructive challenges.
- “Taking additional steps including rulemaking, if needed, to clarify HIPAA privacy provisions and protect covered entities, including employer plans, and others that act in accordance with HIPAA from overly aggressive state action. Health plans need to be able to protect health information without fear of state reprisals for following federal law.
The departments should make technical adjustments and accommodations recognizing the uncertainty facing plans by:
- “Issuing guidance recognizing a universal distinction between medical travel benefits and major medical coverage, and permit compliant, tax-free medical travel benefits to be offered pre-deductible without disqualifying an individual from contributing to an HSA and without regard to whether it is offered within a group health plan.
- “Temporarily accommodating and providing relief regarding expected volatility in reproductive health benefit coverages and medical travel benefits during Mental Health Parity and Addition Equity Act enforcement and assessments.”
Garrett Hohimer, director of policy and advocacy for BGH, says many members expressed urgency about protecting plan members who were counting on the plan covering reproductive claims. But they were advised to go slow.
Related: After Dobbs: HSAs, FSAs, HRAs and abortion coverage
“First, we are preparing our members for the idea that this is going to be a long period of uncertainty,” he says, alluding to the expectation that many state legislatures will be mulling responses to the decision. “Right now, there does not appear to be any quick fix, answer or resolution that in any way would assure an employer that they were making the correct choice.”
Plan sponsor responses have generally shaken out into three categories, he says: employers that made “very public announcements about what they are going to do;” those who are “waiting to see” how the issue plays out; and employers who “may do something applicable to their specific population.”
According to Hohimer, members of this last group are “looking at their program holistically, not just with the lens of abortion coverage. They are crafting programs that work for their participants, but they won’t roll it out broadly. It will be more of an arrangement between them and their employees.”
Hohimer says the bulk of inquiries center on paying the travel expenses of women seeking abortions in states where the procedure is legal. He notes that healthy precedents already exist for companies to cover travel for out-of-state procedures. For example, members have long been reimbursed for back surgery, cancer treatment, and other procedures where the service is not offered within the plan’s state. Such expenses have also been paid when the plan member has chosen a center of excellence for services in another state.
Meanwhile, some employers are testing reimbursements outside the plan to avoid controversy.
“They want to provide travel reimbursement as a standalone benefit through payroll reimbursement or another type of program,” he says. “That gets a little hairy. It’s hard to say it isn’t a medical type benefit, as it would look like another health plan benefit. And there’s the question of how an employer should respond if law enforcement inquires about the situation.”
For large self-insured plans, Hohimer says, those decisions are less difficult. Fully insured plan sponsors could face a more complicated scenario: Does their insurance operate in multiple states? Does the insurer feel comfortable paying a claim for someone who might be considered a criminal in their state of residence?
“Unless you are very assured about your view [on travel allowance, etc.], this is going to be a very fraught and contentious issue for a long time,” he says. “It will be litigated. And employers will be put in the middle of that.”
Clients have “passion” for covering ARS
While BGH was communicating with its members, HHS and Treasury, a total people investment company named Sequoia surveyed 208 mid-sized to large companies, asking how they were responding to the court’s ruling. Nearly 70% were fully funded, while the rest were self-funded plans.
The major findings:
- 92% of companies are considering PTO for travel to care.
- 35% of companies are considering offering employee relocation to another state that has less restrictions on care.
- Almost half of the self-insured companies cover, or plan to cover, abortion-related care and travel expenses.
- Self-insured companies are more likely than fully insured companies to cover travel for infertility or gender-affirming care.
- 4 in 10 companies plan on offering a maximum travel benefit ranging from $4,000–$10,000, with 27% of companies offering this benefit amount per occurrence.
Lesley Grady, vice president of enterprise practice at Sequoia, says the surveyed employers want to support their plan members in accessing care. “The majority of our clients do cover abortion-related services in their current plans. Most respondents are covering or plan to cover a portion of travel for abortion-related services,” she says. Yet 62% were unsure about choosing the right strategy/method to provide that coverage.
Read more: Dobbs and the abortion ban: the benefits world scrambles to deal with a new reality
“In our survey, we looked at many different methods to offer reimbursement,” she says. “Each one has benefits and risks. It can be very complicated to provide a travel reimbursement in a compliant manner.
“Self-insured plans generally have an ERISA preemption, so they have more flexibility when it comes to state insurance laws,” she adds. “If you are fully insured, the conversation is largely around travel reimbursement. You have to review your options and exclusions within the group health plan. If they do not align with the employer’s goals, it’s important to discuss the benefits strategies and risks.”
Looking to the future, and the possibility that the Dobbs decision could spill over into limiting other reproductive and gender-affirming care, she says “many employers are seeking to reimburse for travel beyond abortion-related services. They want to provide a travel reimbursement that would include gender-affirming care and infertility services, or provide travel reimbursement for all care limited by geography.”
For the time being, plan sponsors should be cautious before proceeding. “There’s a lot of passion around this issue,” Grady says. “Employers want to ensure their team has access to the care they need. However, companies are starting to understand the many risks and the complexity of this landscape.”