Dobbs v. Jackson: Fallout for Benefit Plans and Other Employer Considerations
June 28, 2022
The U.S. Supreme Court’s June 24th decision in Dobbs v. Jackson Women’s Health Organization overturned Roe v. Wade and Planned Parenthood v. Casey, which previously held that the Constitution prohibited states from banning abortion or unduly burdening access to abortion services during initial phases of pregnancy. After the recent Dobbs ruling, states now have complete freedom to either allow or prohibit access to abortive care within their borders. At least 24 states have laws that can now be enforced barring abortion or imposing strenuous conditions. 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. We expect that this decision will also open the door for further state regulation regarding reproductive rights. In light of the Supreme Court’s decision, we recognize that some employers will want to continue to provide abortion-related benefits to their employees. This Client Alert outlines various plan design options and other factors to consider. 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.
Action Steps
As explained below, employers sponsoring group health plans should closely analyze any abortion benefit offered under their group health plans to ensure full compliance with applicable restrictions. Depending on the type of plan offered, employers may have some amount of discretion in enhancing or restricting coverage. Employers wishing to support employees seeking abortions through employee benefits may have to creatively examine alternative benefit structures if they find themselves in a state that prohibits abortion. A review of non-benefit policies and practices may also be necessary to ensure a peaceful and productive working culture in this new “post-Roe” era.
Group Health Plan Coverage
How this change affects group health plan coverage offered by employers will be different depending on whether the plan is fully-insured or self-funded, as well as where the plan is issued, and where the employees work and reside. We recommend that employers carefully review their group health plans to understand what level of coverage for abortion is currently available. Also, to the extent an employer has employees in a state with particularly strong prohibitions on abortion, consultation with legal counsel is highly recommended.
Fully-Insured Plans
Insurance carriers will have to tailor fully-insured plans to provide coverage in accordance with applicable state law, based on the state where the policy is issued – not where the plan’s participants reside or work.Because some states will prohibit covering abortions (and other states will require such coverage),employers operating across several states may choose to obtain coverage from an insurer in the state which more closely reflects their desire to provide or restrict abortion coverage. Of course, providing coverage for an abortion doesn’t necessarily mean that a participant may easily obtain abortive services if they live in a more restrictive state.
Self-Funded Plans
Because ERISA preempts state law, employers subject to ERISA offering self-funded health plans may largely ignore state insurance laws and choose whether or not to cover abortive services. With that being said, there are a few caveats to consider before amending your plan:
- Non-ERISA employers (such as local government plan sponsors) will likely have to follow state laws and guidelines, much like fully-insured plan sponsors
- Self-funded plans carrying insured stop-loss coverage may experience carve-outs in those fully-insured re-insurance policies, as carriers will have to follow state law
- While ERISA plans do not have to follow state insurance laws, employers should carefully consider other state laws where their employees reside to understand if there is any other kind of potential risk. For instance, if a state imposes civil or criminal penalties on individuals or providers assisting with obtaining abortions, it is not yet clear whether such penalties could impact plans or plan sponsors covering abortive services.
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