The Dobbs Decision: Client Talking Points for Brokers and Advisors


The decision of the United States Supreme Court on June 24, 2022 in Dobbs v. Jackson Women’s Health Organization means that, for the first time in almost 50 years, employers that sponsor group health plans are subject to state-level regulation of abortion access. Employers will naturally turn to their group health brokers and advisors for initial guidance. Below are some talking points for brokers and advisors, including tips on when legal guidance from ERISA counsel may be required.

  1. First, be aware that there will be no one-size-fits all approach. Each client’s path forward will vary depending upon whether their group health plan is self-insured, or insured, what states they operate and have employees in, and on whether they offer additional benefits such as health flexible spending accounts (health FSAs), health reimbursement arrangements (HRAs), or Health Savings Accounts (HSAs).
  2. With that in mind, you can start by cataloguing the plans each client has in place, and the states in which they have group health insurance policies in place and employ personnel. Remote work in the post-COVID environment may make it challenging to identify all states in which employees perform services for your client.
    a. If, for instance, a client has a fully insured group health plan under a policy issued in a state that has a trigger law, such as Kentucky, then abortions will likely become unavailable under the insured plan. (A discussion of state trigger laws prepared for the American Society for Reproductive Medicine is found here.) You will want to work with the carrier and the client to communicate potential changes to the policy and coverage around abortion services.
    b. If, for instance, your client has a self-insured group health plan, it is not directly impacted by state laws prohibiting abortion due to ERISA preemption. However, state criminal laws of general application are not preempted by ERISA. Employers with self-insured group health plans with employees in states that make abortion a crime may need to address potential liability and ERISA preemption issues with legal counsel.
  3. Medical travel benefits are trending as an area of interest for clients with insured plans in states that prohibit abortion, and for all clients with employees living in those states that may need to travel for abortion services. There are a variety of ways to provide medical travel benefits and a whole host of potential compliance issues that arise. You may not be in a position to advise on all of the issues, some of which cross over into legal advice, but you should be familiar with key points, as follows:
    a. Whether to offer the benefit pre-or post-tax – medical travel reimbursements are fairly limited under the tax code and fairly low dollar limits apply under health FSAs ($2,850) and Excepted Benefit HRAs ($1,800). An integrated HRA or a post-tax arrangement can be in an amount the employer chooses.
    b. ERISA compliance – a medical travel reimbursement arrangement will be subject to ERISA disclosure requirements and ERISA reporting requirements depending upon the number of participants eligible under the arrangement.
    c. Mental Health and Addiction Equity Act and HIPAA Privacy issues – if the arrangement covers medical travel only for abortion services, parity for mental health benefits is a problem. For this reason, it may be preferable to offer benefits for all types of medical travel. Processing reimbursements for such plans will involve review of protected health information and trigger HIPAA compliance if the arrangement covers 50 or more participants or is an arrangement of any size that is administered by a third party. For this latter reason some employers are offering generalized travel reimbursement plans that do not require proof of medical treatment. Note that such arrangements would not be subject to ERISA (and ERISA preemption would not apply to any aiding and abetting laws asserted against employers offering them). Such arrangements would also potentially trigger wide uptake among employees and considerable employer expense.
    d. Medical travel reimbursement arrangements will need to be coordinated with other arrangements such as health FSAs and eligibility under a medical travel arrangement will impact HSA eligibility. A careful survey of clients’ benefit landscape is necessary before implementing a medical travel reimbursement arrangement.
    e. States such as Texas and Oklahoma have laws that prohibit “aiding and abetting” abortion – including through provision of insurance and reimbursements – which could be directed at employers offering these benefits. Further, a group of Texas legislators (the “Texas Freedom Caucus”) has threatened criminal prosecution of at least one employer that offers travel benefits for those seeking abortion services. The ultimate enforceability of these provisions against employers will need to be determined through litigation, which may take years to unfold. In the meantime, clients contemplating medical travel benefits for abortion services will need competent legal counsel on potential liability and ERISA preemption issues that are raised.
  4. Be mindful of stop-loss coverage and the need to involve the stop-loss carrier in discussions of any change in self-insured plan design, around abortion services.
  5. Be aware that the compliance landscape is shifting constantly and that it is important to closely monitor your sources for benefits news. Even as this post was being finished, it was announced that the Dick’s Sporting Goods chain, which had offered a $4,000 travel benefit to employees seeking out-of-state abortions, was sued by “America First Legal,” a conservative group, on the grounds that the travel benefit violated Title VII of the Civil Rights Act by discriminating against female employees who choose to give birth. As many of the key issues in this area will be litigated, fast answers are not available. The safest strategy for the foreseeable future is to stay informed and proceed with caution. The above information is a brief summary of legal developments that is provided for general guidance only and does not create an attorney-client relationship between the author and the reader. Readers are encouraged to seek individualized legal advice in regard to any particular factual situation. © 2022 Christine P. Roberts, all rights reserved.

Photo credit: Cody Engel, Unsplash

5 Things California Employers Should Know About the Current State of Health Care Reform

by Amy Evans, HIP, President, Colibri Insurance Services and Christine P. Roberts, Mullen & Henzell L.L.P.

There is still a lot of debate going on at the federal and state levels about health care reform. In Washington, D.C., the Senate is working on a second round of revisions to the American Health Care Act (AHCA), but there is lack of alignment within the Republican party about the new plan, and the current administration is now occupied by other items. At the state level, a Senate bill proposing a state-wide single-payer health care system is making its way through the legislature and generating a lot of conversation about a complete overhaul of health care financing and delivery. With all of the uncertainty and political noise, it can be difficult for employers to know where to put their attention and resources. Here are five things California employers should know about the current state of health care reform.

1) California is leading the discussion about single-payer. California Senate Bill 562 is currently making its way through the state legislation. If enacted, SB 562 would eliminate the private health insurance system in California, including health insurance carriers, health insurance brokers and employer-sponsored health insurance benefits. It would replace them with a state-run, “single-payer” system called the Healthy California program, which would be governed by a 9-member executive board, and guided by a 22-member public advisory committee. At this juncture, funding measures for the bill are vague but include appropriation of existing federal funding for Medicare, Medi-Cal, CHIP and other health benefits provided to California residents, as well as an increase in payroll taxes. The estimated cost for this system is $400 billion annually, which is twice the size of the current budget for the entire state. SB 562 is widely popular in concept but also widely misunderstood, with many confusing it for a universal coverage system that would be supplemented by private and employer-sponsored coverage. The bill is currently in suspense with the Appropriations Committee in Sacramento. The committee chair (who is also the author of the bill) may wait for the results of a detailed study on the bill’s cost and impact, or he may choose to send it to the Senate for a vote. If the bill makes it through the Senate and the Assembly (which it is likely to do because it is such a popular concept), it is anticipated that it will be vetoed by Governor Jerry Brown, who has already expressed concerns about the bill’s financing. Alternatively, the legislature could vote on the bill and then table it until a new governor takes office in 2018. Either way, the bill would become a ballot measure to be approved by voters. Progress of the American Health Care Act in Washington, D.C. will impact SB 562 because the state bill would make use of state innovation waivers, which are slated to expand under the AHCA, but federal retooling of health care reform won’t impede SB 562’s progress to the Governor’s desk. Employers who offer health insurance as a benefit to attract and retain quality employees should be aware of the meaning and impact of this single-payer bill and should continue to track its progress.

 2) “Play or Pay” is still in play. The Affordable Care Act (ACA)’s “play or pay” penalties are still in place, so Applicable Large Employers are required to offer affordable, minimum value health insurance to eligible employees or pay a penalty. The current administration has suggested that they will reduce the penalties to $0 retroactive to 2016, but that has not happened yet. The 1094/1095 reporting requirements also remain in place. There has been some recent talk that penalty notices for 2015 and 2016 may be going out soon, perhaps first to the employers who have the largest penalty assessments.†  However, the Internal Revenue Service is also significantly understaffed so the availability of resources to enforce these penalties remains in doubt. Applicable Large Employers should continue to assess their play or pay options, track employee hours and offers of coverage, and complete 1094/1095 reporting for 2017. They should also address any penalty notifications from the IRS in a timely manner.

3) If there are no penalties, revenue has to come from another source. The extremely unpopular revenue-generating pieces of the ACA, including the individual mandate, the employer mandate, and the Cadillac Tax (currently delayed to 2020) are likely to be cut from the new AHCA, but that would create a shortfall in revenue that would need to made up elsewhere. The employer exclusion is a popular target in current discussions – this is the tax benefit that allows employer contributions to health insurance to be considered separate from employee income. If the employer exclusion is capped or eliminated, it will effectively increase taxes on the approximately 50% of U.S. residents who receive health insurance through their employers, and deliver a huge blow to the employer-sponsored health insurance system. Employers who offer health insurance as a benefit to attract and retain quality employees should be aware of the meaning and impact of capping or eliminating the employer exclusion.

4) 2018 Health insurance renewals will be business as usual. Insurance carriers filed their health insurance plan designs and rates with the regulatory agencies (Department of Insurance and Department of Managed Health Care) for 2018, so any substantive changes to plans (for example, removing Essential Health Benefits) won’t happen until 2019. For employers offering coverage, this means business as usual for 2018 health insurance renewals. Expect increases to premiums to average 10-15%. Also expect lots of plan changes – some plans may be discontinued and participants will be mapped to new plans; benefits many change even if plan names remain the same; carriers may reduce networks and pharmacy benefits and increase deductibles and out of pocket maximums to keep premiums in check.

5) Cost-containment tools are gaining in popularity. As out of pocket costs continue to increase for health insurance participants, we will continue to see a move towards consumer-driven health care, where participants are encouraged to be more involved in the spending of their health care dollars. Health Savings Accounts (HSAs) are growing in popularity again, carriers are providing tools to promote transparency for comparison shopping, and alternative delivery systems like telehealth, nurse on call, minute clinics, free-standing urgent care centers, and even flat-fee house calls are gaining in popularity. Health Reimbursement Arrangements (HRAs), self-funding arrangements and cash-benefit policies can also be effective tools for cost containment. Employers should work with their health insurance brokers and other benefit advisers to assess the value of these tools in their current employee benefits programs.

In closing, employer-provided health benefits rest on shifting legal sands and that is likely to remain the case for some time.   Planning opportunities, and pitfalls, will arise as the reform process moves forward and the informed employer will be in the best position to navigate the changes ahead.

†Hat tip to Ryan Moulder, Lead Counsel at Accord-ACA for this detail.