In a Post-Roe World, Employers Looking to Cover Out-of-State Travel for Abortion Services Have Multiple Options and Plenty of Uncertainty

By Karen Davenport

The Supreme Court’s recent decision in Dobbs v. Jackson Women’s Health Organization ended the long-recognized constitutional right to abortion in the U.S., permitting states to restrict or even ban abortion care. As of early July, eight states completely ban all abortion services at any point in pregnancy, while sixteen states and D.C. protect the right to abortion prior to fetal viability or throughout pregnancy in state statute. In other states, “trigger” laws restricting abortion upon the reversal of Roe v. Wade will soon be implemented, while still others have legislatures that have yet to weigh in. All told, some analyses project that up to half of women and girls in the U.S. between the ages of 15 and 44 will live in states that significantly restrict or ban abortion services once pending court cases are resolved.

Just as these state laws upend how many employers cover abortion for their employees, the scale and geographic reach of these bans intensifies questions about travel costs and access to these services. When the Dobbs decision leaked in early May, well-known corporations such as Levi Strauss and Starbucks publicized existing or new travel benefits related to reproductive health care for workers enrolled in the health plans they sponsor. After the Court released its final decision on June 24, many more companies announced plans to help employees travel, if necessary, to access abortion services. In some cases, businesses can cover abortion-related travel costs through the health coverage they offer to employees and employees’ dependents. In other cases, employers will need to find alternate mechanisms for covering travel expenses for their pregnant employees who live in states with restrictive abortion laws.* Employers’ decisions on whether and how to cover travel costs related to abortion care will have a significant impact on whether workers are able to access abortion services far from home.

Current Coverage for Travel Costs

In some cases, employer-sponsored insurance plans already cover travel costs related to distant or out-of-state care. Employers most frequently cover travel to selected out-of-state providers for specialized procedures, typically in disciplines such as oncology, cardiology and orthopedics. For example, 16 percent of employers with 50 or more workers (including 52 percent of employers with 5000 or more workers) report that their largest health plan encourages enrollees to choose plan-contracted “centers of excellence,” for their care. Nearly half of large firms with these provider contracts also cover travel and lodging expenses for enrollees who receive care at designated centers.

A very small proportion of employers already provide travel benefits for abortion and reproductive health services that employees cannot access in their state of residence. According to the SHRM Research Institute, five percent of surveyed human resources professionals reported their organizations provided these benefits prior to the Dobbs decision.

Employers may also fund a health reimbursement arrangement (HRA) or a Health Savings Account (HSA), tax-advantaged accounts employees may use to pay for eligible medical-related travel expenses. Employers may also contribute to employees’ Health Care Flexible Spending Accounts (FSA), which also provide a tax-advantaged way for employees to pay these expenses, although employers’ ability to fund these accounts is connected to the size of employees’ contributions. According to KFF, 31 percent of covered workers were enrolled in either a high-deductible health plan combined with an HRA or in an HSA-qualified high-deductible health plan in 2020. (KFF’s data does not indicate how many workers who enrolled in HSA-qualified plans also held a funded HSA.) Employers alone fund HRAs, which need not be combined with a high-deductible plan, while workers and employers can both contribute to HSAs. Employees may use funds in either type of account for qualified medical expenses, which the Internal Revenue Service defines as expenses that generally qualify for the medical and dental expense deduction. These expenses include transportation costs related to accessing medical care – specifically bus, taxi, train, or air fare and lodging while away from home.

Employers Have Multiple Options to Expand Coverage of Workers’ Health-related Travel Costs

Employers who wish to cover travel costs related to abortion will need to identify the best approach.* Employers with self-funded plans—typically larger employers with locations in multiple states—may find it easiest to add coverage for travel expenses as a new benefit to their existing health plans. Self-funded plans are largely not subject to state law, which means these employers may be able to offer a travel benefit to all employees, including those who live in states with restrictive abortion laws. According to KFF, 64 percent of covered workers are enrolled in a self-funded plan; some industries with heavily female workforces, such as health services, are significantly more likely to self-fund health insurance.

In some cases, employers who purchase “fully insured” plans, which are subject to state regulation, may also negotiate with their insurance carriers to offer travel benefits for enrollees who will need to travel out of state to access abortion. In some states, however, this approach may be complicated and risky. Eleven states completely or significantly restrict coverage for abortion services in state-licensed health plans, and while nine of these states permit employers to offer more expansive abortion coverage by purchasing a policy rider with a separate premium, insurers do not appear to offer this option in most markets. These restrictions may also implicate a plan’s ability to pay for abortion-related travel, and state legislatures could also seek to limit state-licensed insurers’ ability to pay for out-of-state abortion care or out-of-state travel for these services. In addition, employers who cover these travel costs may risk violating state prohibitions on “aiding and abetting” abortion care; Texas and Oklahoma laws further enable private citizens to file civil claims against employers that pay for or otherwise support employees’ abortions. Some benefit advisors suggest that employers may protect themselves by creating broad travel benefits rather than restricting coverage to abortion-related out-of-state travel.

Employers could contribute to tax-advantaged accounts, such as HRAs, HSAs and FSAs, to cover travel costs for abortion care. The choice among these options may depend on (1) whether they offer high-deductible, HSA-qualified health insurance, (2) whether they want to own the account or want employees to own the account, and (3) whether they want to cover the cost of most out-of-state travel or a contribute a potentially smaller amount. For example, maximum employer contributions are generally more limited for HRA and FSA accounts than for HSAs.

Finally, employers such as Dick’s Sporting Goods have announced plans for helping employees with out-of-state travel for abortion care outside of any health insurance arrangement. Dick’s and similar employers have chosen to reimburse actual travel expenses, up to a pre-defined limit, or to provide a flat amount employees may use to facilitate out-of-state abortion services (for example, Dick’s will reimburse up to $4,000 for travel to the nearest location where abortion care is legally available).

Considerations and Limitations

As employers identify a strategy for assisting their employees seeking out-of-state abortion care, they will need to weigh specific approaches against their goals for this assistance. For example, strategies that rely on employer-sponsored health insurance or a related HSA will only help plan enrollees, while employees who decline employer coverage or are not eligible for the company health plan will not receive assistance. For example, Amazon has indicated this assistance will not extend to contractors, such as delivery drivers, who are not eligible for benefits. Employers will also want to consider how closely they want to target this help. Employees may use employer contributions to an HSA, for example, on other health care needs, and because HSA-eligible plans must carry high deductibles, employees with health concerns beyond pregnancy may also find it hard to pay for other care they need.

Employers who choose a reimbursement approach can ensure that all employees—not only heath plan enrollees—receive assistance, but will also need to consider whether employees are likely to have the savings or credit they need to pay for abortion-related travel and seek reimbursement later. To provide meaningful assistance to employees at all income levels, employers may need to pay for travel expenses up-front.

Administering transportation assistance through a health plan, which must comply with restrictions on sharing personal health information under the Health Insurance Portability and Accountability Act (HIPAA), can help mitigate employees’ concerns about sharing their need for abortion care with their employer. However, an employer-managed reimbursement arrangement is unlikely to be covered by the federal health care privacy law and workers may end up sharing their personal health information with their employer to receive travel assistance. Another consideration will be the underlying plan design—if employers add travel assistance to their group health plan, but that plan has a significant deductible, workers who have not met the deductible may still need to pay these expenses out-of-pocket. Finally, in many circumstances, employees may incur a tax liability for travel assistance. Under IRS rules, for example, eligible lodging costs are currently limited to $50 per person per night, meaning coverage for lodging through either an employer-sponsored health plan or under a reimbursement arrangement will be taxable beyond this limit.

Lastly, employees who most need help accessing out-of-state abortion care—specifically, lower-income workers who hold part-time positions or work in service industries—may not benefit from these employer initiatives. These workers are less likely to have employer-sponsored health insurance and thus may not benefit from coverage for travel expenses within employers’ health plans. Some of the largest employers of lower-wage workers, such as Walmart, have not indicated they will provide this assistance in any form.

Takeaway

The weeks since the Supreme Court reversed Roe and state abortion bans started taking effect have generated more questions than answers about how employees and dependents living in states that have restricted abortion can access care. Employers who are committed to helping workers access out-of-state abortion services have multiple options to achieve this goal, but also face complex choices, uncertainty, and potential legal risks. And while an employer benefit for travel costs helps lower one of the major barriers to obtaining abortion care after the Dobbs decision, this benefit will likely help mostly moderate- and high-income workers, exacerbating already unequal access to this health service.

*This blog is not meant to provide legal advice and does not discuss all of the potential legal consequences for employers who provide a benefit for workers to travel to access abortion care.