Dobbs’ impact on employer-provided health care

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This is not an article about politics. You can find out for yourself. This is an article about the options available to employers following the June 24 Supreme Court decision Dobbs v. Jackson Women’s Health Organization decision that overturned Roe vs. Wade.

Group health plans are the natural starting point for thinking about reimbursing expenses related to employees’ family planning decisions. A jumble of laws covers group health plans, and in all likelihood, you won’t be able to navigate this landscape on your own. But we can start you on the way.

What is medical care?

Group health plans reimburse employees for medical care. Medical care is defined in IRC § 213(d)(1) as:

(A) The diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body

(B) For transportation primarily and essential to the medical care referred to in sub-paragraph (A).

The ERISA definition of medical care is identical.

Reproductive services meet this definition, including telehealth services and pharmacy benefits.

Which law applies?

Self-insured health plans are subject to ERISA, which generally overrides state law. Exception: ERISA does not override generally applicable state criminal laws, but generally applicable criminal laws do not apply to health plans covered by ERISA. Results: Until the Supreme Court rules otherwise, people working at companies located in certain states cannot be sued for helping an employee with her reproductive care benefits.

Fully insured plans are not subject to ERISA and are subject to state insurance laws. So the only thing we can say today is that self-insured plans have more leeway than fully insured plans.

Can employers pay for employee medical travel?

dobbs-employer-healthcare-450x400px-3Generally, yes, if your health insurance plan covers medically necessary travel. If not, you can modify the plan to cover medically necessary travel. If a third-party administrator runs your medical travel program, give them time to adjust.

A word of advice: Plan amendments should cover all medically necessary travel. Plan changes will also require you to change your plan’s summary description and may require you to change your summary of material changes by the end of the plan year. But the benefits can take effect now.

Employees need to be able to justify their trip without overwriting details—travel for family planning purposes Where travel for reproductive care should suffice for now.

In addition to transportation expenses, tax-free reimbursements for employee medical travel are limited to $50 per person per day for accommodations; meals are not included. Reimbursements for accommodation over $50/day are taxable, but you can increase the reimbursement. The payment of an employee’s meal expenses would also be taxable.

There are two plan design issues:

  • You can violate the Mental Health Parity and Drug Equity Act of 2008 if you reimburse medically necessary travel, but not travel related to employee mental health.
  • A stand-alone medical travel reimbursement plan will be considered a group health plan under ERISA and the Affordable Care Act. Results: These plans must meet ACA requirements not to impose annual or lifetime limits on benefits and must cover preventive services without cost sharing.

What happens if an employee receives out-of-network care?

The No Surprises Act can help, bearing in mind that in most cases these services are not emergency services. For non-emergency services, out-of-network providers may balance the bill if they provide written notice to employees 72 hours prior to their appointment and receive their consent to balance the bill. If it is not possible to give three days notice, notice may be given on the day of the appointment.

Employees may be able to use one of the following funding options to offset the balance bill.

Are there other options?

Again, self-insured plans have the most discretion. Assuming your self-insured plan covers reproduction services (most do) and employees receive these services in a state where it’s legal:

  • Employees can use their health FSA to cover the costs. You can also contribute to employee FSAs, but beware of discrimination tests. Employees can carry forward a certain amount of unused funds to the end of the year ($570 for tax years beginning in 2022). Your plan must be amended to allow the rollover option.
  • Employees can use health savings accounts to cover costs, and you can contribute too. However, HSAs must be associated with high-deductible health plans. High deductibles continue to apply.
  • Employees can access benefits provided through an employee assistance plan. While EAPs traditionally address issues affecting mental and emotional well-being, they can also be used to address medical services and travel. Plan design issues: Benefits are excluded benefits under HIPAA if not material benefits in the nature of medical care, benefits are free to employees (i.e., no sharing cost or co-payment) and benefits are not coordinated with other group coverage.
  • You can create a relief fund to help employees. However, payments from such a fund would be fully taxable to employees.
  • You can create a medical emergency leave sharing plan, under which employees donate accrued leave to co-workers facing medical emergencies. Amounts paid to beneficiaries are fully taxable; Donated amounts are not taxable to donors. Employees must justify their medical emergency.
  • You can increase the time in the PTO banks of all employees.

What about employee privacy?

HIPAA protects the confidentiality of employee medical records. Employees must account for their use of FSA funds, which will activate the privacy provisions of HIPAA. You should also be aware of any national privacy laws.

Afterwords

Dobbs is an explosive decision no matter which side of the political line you fall on. As such, you need to make sure that the conversations employees have with each other are polite and don’t go off the beaten track. From what we can see, you have two options:

  • You remind employees that all conversations should be respectful.
  • You can ban discussions of this and other political workplace issues. Unless you are a public employer, the workplace is not a democracy, so you may ban certain speeches and not others.
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