Companies that want to provide travel benefits for abortion services should include them in their health plans, rather than separately, legal experts say.
That advice is coming from many employee benefit attorneys as more companies like Walmart offer travel coverage to employees in states where abortions are restricted following the US Supreme Court’s June 24 decision in Dobbs v. Jackson Women’s Health Organization that overturned a federal constitutional right to abortions.
Walmart said Aug. 19 it is expanding its travel benefit so that employees and their family members can access covered services that aren’t available within 100 miles. It also said its self-insured health-care plans will cover abortion when there is a health risk to the mother, rape or incest, ectopic pregnancy, miscarriage, or lack of fetal viability.
The number of US employers offering travel benefits for abortion services is expected to double over the next few years in the wake of the decision, insurance advisory company Willis Towers Watson PLC reported this month. Thirty-five percent of the 305 employers surveyed as of Aug. 1 now offer travel benefits for elective and medically necessary abortions, another 16% plan to offer the benefit in 2023, and 21% are considering it.
Among employers with fully insured plans, 93% of companies expect to cover elective abortions by 2023 in states where abortion is permitted by law, compared to 82% of self-insured employers in those states, the survey found.
“On the self-funded side you have the flexibility to add it to the plan,” Gabrielle White, counsel for benefits and compensation with New York law firm Davis+Gilbert LLP, said in an interview. Employers pay claims directly and have greater control of self-funded plans. They differ from fully insured group health plans that are purchased by employers, which pay premiums to health insurance companies that assume the risk of covering claims.
Self-funded plans are regulated by the federal government under the Employee Retirement Income Security Act, while fully insured plans are limited by state laws and regulations where they operate. In states that restrict abortions, fully insured plans may be prohibited from covering them.
More than 120 companies have announced coverage of travel for abortion care, most of which have at least 500 employees, Lizamarie Mohammed, senior program associate at Rhia Ventures, said in an interview. Rhia Ventures, a San Francisco-based firm that invests in reproductive healthcare, tracks companies that publicly disclose their abortion benefits.
Medical Travel Covered by Tax Law
Travel is included in the definition of medical care in Section 213 of the Internal Revenue Code, White said.
“If you’re paying for medical care, then if it’s not run through the health plan, there’s a risk that you are creating a health plan,” which is subject to various legal requirements that the company’s existing health plan already satisfies, she said. “It can be difficult for that separate benefit to satisfy those requirements.”
Companies could offer travel benefits only for abortion, but many companies are providing travel benefits for any covered medical procedure, White said.
Under the latter terms, if no medical providers for a covered procedure or benefit is available within a specified distance, travel expenses are covered to obtain the care, she said. “It’s not limited to abortion only.”
That could help protect companies in a state that has laws against aiding and abetting abortions, such as Texas, White said. “It’s harder to claim that you’re aiding and abetting an abortion when this is a broader-based benefit,” she said.
While larger companies often provide travel benefits to centers of excellence, those are limited to specific procedures such as organ transplants that are only performed at a few hospitals, White said. Broadening travel benefits builds on systems already in place, making it easier to administer, she said.
Smaller clients with fully insured plans in states that allow it may have the option of providing travel benefits through those group plans, White said. Blue Cross Blue Shield of Massachusetts said June 24 it had developed a travel benefit that employers could choose covering travel of at least 100 miles to obtain access to abortion services.
Companies also could provide general travel benefits, such as providing cash for people to travel, White said. But that isn’t likely to be a choice for many companies since employees could use the money for a vacation and need it later for abortion services, she said.
Limiting Travel Coverage
For employers with self-insured plans, “the majority of those employers that are going to cover abortion will cover it through a travel benefit” in states where abortions are restricted, Regina Ihrke, senior director, and health, equity & wellbeing leader with Willis Towers Watson, said in an interview. The travel benefit can be administered through the health plan, she said.
The fully insured side is “a little bit harder,” Ihrke said. Fully insured plans in states that don’t restrict abortions will be covering the abortion travel benefit as they do today, or they will most likely provide a travel benefit or funding through a health reimbursement account or health savings account, but 37% of fully insured plan sponsors are unsure of the option they will take, she said.
A “large majority” of employers are limiting travel coverage to beneficiaries who are at least 100 miles from a service provider, Ihrke said.
The average limit for travel expenses and abortion services is about $6,700, she said. But cost is not a major problem, she said. For companies with at least 10,000 employees, “we’re looking at less than 10 in total medically necessary and elective abortions that run through the claims today” each year.
Opening Up Other Travel Benefits
Once employers begin to expand coverage of medical travel expenses, it starts to open them up to demands for coverage of travel for other services, such as gender affirmation and fertility services, Ihrke said.
“There’s other things that are out there that we will start to see as each state makes their decision on coverage,” which could include banning some medical procedures. “Employers have to look at their entire coverage of travel benefits in a much more holistic way.”