HEALTH & WELFARE
JOURNAL of PENSION BENEFITS
ISSUES IN ADMINISTRATION, DESIGN, FUNDING, AND COMPLIANCE
Volume 30 • Number 1 • Autumn 2022
In this column for the Journal of Pension Benefits, Health & Welfare, Sherrie Boutwell and Bonita Hatchett-Bodle outline the critical information employers need to know as they implement healthcare plans in the aftermath of Dobbs.
By Sherrie Boutwell & Bonita Hatchett-Bodle
Sherrie Boutwell is a founding partner of Boutwell Fay LLP and has focused a career of 30-plus years in the areas of employee ben benefits law and ERISA. She is a highly sought-after advisor, speaker, and writer on employee benefits copies and takes pride in bringing a practical and down-to-earth approach to resolving complex benefits issues involving qualified, nonqualified, and health and welfare plans.
Bonita Hatchett-Bodle has 25 years of large law firm benefits practice with Amlaw 100 Law Firms, serving as ERISA and benefits counsel co national corporations, public sector entities, growth, and middle-market companies, jointly-trusteed funds, as well as entrepreneurs in every major industry group, including a national retailer, educational institutions, philanthropic organizations and individuals on employee benefits matters.
The US Supreme Court's decision in Dobbs v. Jackson Women's Health Organization (Dobbs) [Dobbs v. Jackson Women's Health Organization, No. 19-1392, 597 U.S. _ (2022)}, on June 24, 2022, which overturned Roe v. Wade (410 U.S. 113 (1973)} and Planned Parenthood v. Casey (505 U.S. 833 (1992)} has upended many employer-sponsored health plans subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). This column summarizes some of these impacts and considerations for employers and their advisors now that a federal constitutional right to abortion no longer exists.
Benefits Plans Affected
Dobbs itself does not apply to any employee benefit plan. It simply decided that the federal constitution never, from inception, created abortion rights. However, after Dobbs, state laws that were previously believed to be an unconstitutional infringement on a woman’s right to privacy (including with respect to health care decisions about abortion) are, in some cases immediately effective and in others will take effect soon. Some states are rushing to enact new laws in the wake of Dobbs (both to expand abortion protections and to further restrict them). Some states have old laws that immediately went into effect on the day Dobbs was decided.
For employer-sponsored health plans, the impacts of state law will vary depending on whether ERISA preempts state law. That will depend on the type of law and the type of plan sponsored by the employer. It may take years of litigation to sort this out (if that ever happens). Legislative changes at the state or federal level may be enacted and take effect before these issues can be finally resolved by a court.
ERISA preempts state laws insofar as they may relate to any employee benefit plan, with two exceptions: (1) state insurance, banking, or securities laws; and (2) state criminal laws of general application. [ERISA Section 514(a)] As a result, any policy of insurance issued with respect to a fully-insured health plan is still subject to the insurance laws of the state in which the plan provides benefits. If an anti-abortion state that has outlawed or otherwise restricted abortion has not already done so, we can expect that the state insurance commissioner or other appropriate regulator will act quickly to do so.
Self-insured plans, on the other hand, are not subject to state insurance law (although any “stop-loss” policy insuring excess losses in such plan will still be subject to state insurance law regulation). Other federal laws that relate to pregnancy and child birth are not preempted by ERISA and will still apply, for example, the Pregnancy Discrimination Act (which prohibits discrimination against pregnancy, childbirth, or related medical conditions). [Section 701 of the Civil Rights Act of 1964; 42 USC § 2000e(k).]
The other category of laws that are not preempted, even for self-insured plans, are criminal laws of general application. In addition, Texas and other states have enacted civil penalties that apply to those who “aid and abet” an individual seeking an abortion. It is not clear as to whether these types of laws apply to administrators of employee benefit plans that approve payments for abortion services. Again, this will have to be resolved by courts unless new laws are enacted (and then, their application is likely to be litigated as well). In the meantime, employers, plan administrators, and their advisors are scrambling to understand the implications for their plans and their employees. Some employers are proactively offering to reimburse employees for the costs of traveling out of state to obtain abortion related health care, although that new benefit raises many of the same issues just described above, particularly with respect to whether a plan is “aiding and abetting” in states like Texas.
Steps Employers and Plan Administrators Can Take Now
Employers and Plan Administrators can take some steps in the meantime: • Make sure you know where your employees are located. In an age of remote work, even employers based in states such as California where the right to abortion healthcare has been confirmed, may have employees working remotely in other states which have restrictive abortion laws.
• Gather your resources. Contact your brokers, insurers, third party administrators, consultants, trade associations, and legal counsel to get immediate guidance. Perhaps appoint a cross- disciplinary team or committee specifically to deal with the fallout from Dobbs. Input will likely be needed from HR/Benefits, legal, public relations, employee relations, and others. Because multiple state laws may be involved, legal counsel and state licensed brokers may be needed for each state where employees are working.
• Set up a system to monitor legal developments in this area, both at the state, local, and federal levels. At the state level, legislators are moving rapidly, attorney generals are announcing enforcement policies, and, as mentioned above, state insurance commissioners may be involved with insurers doing business at the state. At the local level, some prosecutors are announcing non-enforcement policies (or vice versa), and at the federal level, the current administration already has an initial series of steps it plans to take. [https://www.whitehouse. gov/briefing-room/statements-releases/2022/06/24/fact-sheet-president-biden-announces-actions-in-light- of-todays-supreme-court-decision-on-dobbs-v-jackson-womens-health-organization/] Some state courts have issued injunctions against enforcement. Good sources of information are available from the various government agencies, as well as trade associations, benefit plan brokers and providers, law firms, and others.
• Review all relevant plan documents. These include any plan document, including any “wrap plan” document, summary plan description, insurance policy, employee handbook and service contracts (such as with brokers, third-party administrators and consultants) to determine what the current plans provide and what they do not provide and what role plan service providers have agreed to play. Definitions in the wrap plan document could be clarified, if needed.
• Consider new plans/plan designs. Some employers are considering self-funding to avoid state
insurance laws, as well as expanding opportunities for remote work, expanding telehealth services, and reviewing coverage for Food and Drug Administration (FDA) approved abortion-related medications. Others are adding reimbursement for travel out of state to obtain abortion related health services. It is not clear if this type of benefit violates state law, and it may need to be provided through a health reimbursement account that is integrated with an Affordable Care Act compliant health plan or through an Employee Assistance Program
— Review the applicability of and compliance with the Mental Health Parity and Equity Addition Act, as amended, (as well as comparable state laws) for any new benefit plans/plan designs.
— Privacy rights under the Health Insurance and Portability Act may also apply
• Review applicable leave laws. State and federal mandated leave laws may apply to abortion-related paid time off or leaves of absence.
• Contact your risk management team. Review litigation defense-related insurance policies. Now is a good time to review all potentially applicable insurance policies: health insurance policies, stop loss policies, fiduciary insurance, Directors and Officers coverage, general errors & omissions coverage, employee practices liability insurance, and other potentially applicable policies.
This column is current as of the date written, but the legal landscape for health plans after Dobbs is now in a state of confusion and flux and will likely be that way for quite some time. Employers will need to react quickly to each new development.
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Reprinted from Journal of Pension Benefits, Autumn 2022, Volume 30, Number 1, pages 36–38, with permission from Wolters Kluwer, New York, NY,