After the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health, which allows states to ban abortion, many employers vowed to protect abortion access for their workers. Some employers took action to adjust their health plans, and others promised workers that they would still be able to obtain abortions, even in states where it is illegal, by providing financial support for out-of-state travel or other benefits. Despite their public commitment to healthcare access for their workers, businesses must be aware of the potential for legal exposure in doing so, especially in states that have enacted so-called “aiding and abetting” laws, which treat as criminals those who help others procure an abortion. Employers are taking steps to minimize their liability.
Risk of Liability Under State Laws
To date, employers providing abortion access to their employees have faced no lawsuits in any state, but anti-abortion groups have initiated public threats of lawsuits against large companies in various states over the past several months.
The Texas Freedom Caucus, a group of conservative state lawmakers, sent Sidley Austin, a multinational law firm with offices in Texas, a warning letter about its abortion coverage policy. The letter warned that the law firm and its partners could face felony criminal prosecution and disbarment for facilitating abortions. Texas’ state law criminalizes abortions in all cases except those in which the mother’s life is in jeopardy. Sidley Austin declined to comment on the letter.
Similarly, another group of Texas state legislators, including the members of the Texas Freedom Caucus, demanded earlier this year that Lyft’s CEO rescind its policy covering out-of-state travel for employees seeking abortions. The group also warned of impending legislation that would impose felony criminal liability on the directors and officers of publicly traded companies using corporate resources to fund elective abortion care absent unanimous shareholder approval. Lyft continues to provide coverage for elective abortions and travel expense reimbursement if employees travel more than one hundred miles to access an in-network provider.
In response, some employers have structured their abortion benefits through third-party administrators that process claims and collect documentation from employees. Other employers have modified abortion travel benefits to offer more coverage to employees for all types of medical services, which can encompass not only abortion but also gender-affirming surgeries, a topic which is also becoming controversial.
Federal Tax Consequences
Employers that wish to offer employees more extensive abortion coverage are also facing federal tax complications. For example, the IRS sets a $50 per night limit on lodging for medical care-related travel. Employers that aim to cover all abortion-related travel expenses for employees run the risk of providing taxable benefits to employees. If that occurs, the plan must give information back to the employer about which employees received taxable benefits. This information may not be information that the employer necessarily wants to have, particularly if the reimbursement of travel expenses is limited to abortion care. As a result, it may be more beneficial for employers wishing to add reimbursement of travel expenses to their plans to stay within IRS limits.
ERISA Preemption
Any challenges to the provision of abortion benefits by a large employer’s group health plan also likely will raise questions under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Potential criminal penalties are of great concern to these employers, because although ERISA typically preempts the application of civil laws to benefits plans operated by private employers, preemption does not extend to criminal laws.
ERISA may preempt state criminal laws that specifically target employer actions to reimburse employees for expenses through insurance coverage or provide other forms of support. More generally, the entire point of ERISA preemption is to avoid the burdensome state-by-state analysis that differences in state abortion laws seem to require now.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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