Medical Travel Reimbursement Benefits Under New Supreme Court Dobbs Decision

On June 24, 2022, the U.S. Supreme Court issued its highly anticipated decision in Dobbs v. Jackson Women’s Health Organizationno. 19-1392. The Dobbs decision expressly overturns the two key precedents that have established and upheld a constitutional right to abortion—Roe vs. Wade (1973) and Planned Parenthood of Southeastern, Pennsylvania v. Casey (1992) – and gives states the power to regulate abortion. Judge Alito wrote the opinion of the majority of five judges. Chief Justice Roberts only approved the result, asking for a narrower ruling on the disputed Mississippi law. Judges Breyer, Sotomayor and Kagan dissented.

After Dobbsemployers with health insurance plans that cover abortion services will need to consider whether or how to provide continued access to this relatively underused benefit, especially in states that will automatically restrict access to abortion now that the decision has been made, or who should do so. do it soon.

Many self-insured employers are considering adding medical travel expense reimbursement benefits to their existing medical plans. This raises certain issues related to the Employees Retirement Income Security Act of 1974 (ERISA), taxation and other federal law issues that employers may need to carefully consider, as well as issues potential under rapidly changing state laws. For example, pre-Dobbsboth Oklahoma and Texas have enacted “fetal heartbeat” laws that prohibit aiding and abetting, including reimbursement by health insurance, of an abortion performed in violation of these laws.

State laws relating to employee benefit plans are largely preempted by ERISA. And the courts may well uphold ERISA preemptive challenges to state abortion laws that affect employee benefit plans, including civil “aiding and abetting” abortion provisions that violate state law. But ERISA preemption has significant limitations. For example, state criminal laws of general application would not be preempted and states could update their general criminal laws as a result of Dobbs.

Many employer health plans typically cover abortion services, although these services, like many others, may not be specifically listed in plan documents or summary plan descriptions (SPDs). Many health insurance plans also reimburse travel expenses in certain limited situations, such as under a center of excellence program for transplants or other expensive procedures. Some employers added or expanded travel and accommodation reimbursement benefits after Texas enacted Senate Bill (SB) 8 in 2021. The bill leaked Dobbs notice of early May 2022 has greatly increased employers’ interest in reimbursement of travel expenses.

Federal law generally does not require health plans to cover abortion services. The U.S. Equal Employment Opportunity Commission, however, has interpreted the Pregnancy Discrimination Act to require employer health plans to cover abortions in cases where the mother’s life would be endangered if the fetus was brought to term. Health insurers are subject to state insurance laws, including laws governing whether policies can or must cover abortion services, so insured plans may have less discretion in how and whether to cover abortion services than self-insured plans.

Among the issues employers need to consider when digesting Dobbs and its impact:

  • Third-party administrators may be unwilling or unable to immediately administer travel reimbursement programs, especially complex or customized versions. Some may be able to offer a standard package or approach for these refunds.

  • Pharmacy benefit managers (PBMs) and telehealth providers may also be impacted by new state restrictions on abortions. Many workplace plans currently cover abortion drugs, which can be shipped to a patient’s home after visits with a medical provider, either in person or virtually. PBMs and telehealth companies could be targets of future state laws and regulations in this area.

  • Certain travel and accommodation expenses may be reimbursed as “medical care” and are therefore excluded from an employee’s income. For example, the Internal Revenue Service (IRS) sets the mileage rates that would apply when patients drive to clinics, and the IRS caps accommodation costs at $50 per night for one patient and $50 per night for a travel companion, if necessary for the patient to seek medical attention. Meals and other personal expenses are not “medical care” for tax purposes and therefore reimbursements for these items cannot be excluded from an employee’s taxable income.

  • Employers offering reimbursements through an existing health plan could typically leverage existing compliance structure in areas such as ERISA reporting and disclosure, continued medical coverage under the Omnibus Fiscal Reconciliation Act Consolidated Act of 1985 (COBRA), Affordable Care Act (ACA), and Health Insurance Portability and Accountability Act (HIPAA) Privacy Protections. Employers who wish to consider offering reimbursements separate from an existing plan may want to carefully consider compliance issues under these laws.

  • Employers considering reimbursing certain medical travel – but not for travel related to mental health or substance use disorder benefits – may also want to assess risks under the Parity Act 2008 in Mental Health and Addictions Equity (MHPAEA). The MHPAEA generally prevents plans from applying annual limits, financial requirements, and treatment limitations to mental health and substance abuse disorders that do not apply, or are not applied as strictly, to medical benefits generally. .

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, PC, All rights reserved.National Law Review, Volume XII, Number 175

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