In the wake of the Supreme Court’s decision to overturn Roe v. Wade, many Americans are left with questions about their health insurance coverage. Employers have a responsibility to help employees understand their benefits, so it’s critical to stay informed. Below, we explore questions you may encounter from your workers.
Is abortion covered by health insurance?
It depends. States in the U.S. fall into three buckets:
- States in which there is no limit on abortion
- States in which abortion is limited to a certain term (this term varies across states)
- States in which abortion is banned
Illegal abortions are not covered by any health insurance plans. This means any abortion that takes place in a state that has banned abortion–or any abortion that takes place after the state-allowed term has elapsed–will not be covered by health insurance.
Legal abortions may be covered. Coverage varies from plan to plan, so individual plan documents must be consulted to make this determination (if you can’t find this in your plan documents, reach out to your health insurance carrier.
If the employee chooses to travel to another state for a legal abortion, it is possible the procedure may be covered. It’s important to consult individual plan documents, because even if abortion is covered by the health insurance plan, out-of-state medical care may be considered out-of-network, which means the care may be only partially covered–or not covered at all. On the other hand, certain plans do allow employees to seek medical care nationwide, so be sure to comb through the plan specifics to make this determination.
Possibly. Employers who use fully-insured plans have less flexibility than self-insured employers so individual plan documents must be consulted. Here’s a quick look at the difference between fully-insured plans and self-insured plans.
|Fully-Insured Plans||Self-Insured Plans|
What about abortion riders?
Health insurance riders are supplemental benefits that cover certain services that are not included in a health insurance plan. Riders may be purchased by either the employer or the employee to fill a gap in health insurance coverage.
In the absence of health insurance plan coverage, abortion riders may seem like a feasible option, but in reality, there there are serious limitations that make them effective. Let’s examine some of these limitations; in order to obtain and use an abortion rider, the following things must be true:
- The employee must either live in a state where abortion is banned or subscribe to a health plan that does not cover abortion.
- The insurance carrier must offer abortion riders.
- The employee or employer must be able to anticipate the need for an abortion ahead of time (clearly, this is difficult because abortions are typically unexpected), and timing may be tricky because different insurance carriers have certain waiting periods before coverage from the rider kicks in.
- Either the employee or the employer is willing and has available funds to purchase the rider.
- In order to use an abortion rider, the health plan deductible must be met (specific requirements around this varies across health plans, so be sure to check with your carrier).
Do medical reimbursement plans cover abortions?
Because they are subject to federal law (not state law), tax-free medical reimbursement funds like FSAs, HSAs, and HRAs may start to play a more central role in coverage for abortion because they are not subject to the same state restrictions.
Let’s take a deep dive into each of these:
FSAs and abortion coverage:
Need a refresher on FSAs?
A flexible spending account (FSA) is a supplemental benefit; this means that it does not replace a healthcare plan—it is an added benefit. An FSA enables an employee to contribute up to a certain amount each year to a special account. The money that is contributed is not subject to taxes and can be used to pay for out-of-pocket healthcare expenses.
- Employers may contribute to FSAs but are not required to.
- FSAs do not roll over from year to year (any unused money is forfeited at the end of the plan year).
- If an employee gets fired or quits, the FSA funds may be forfeited (sometimes funds may be accessed through COBRA).
FSAs are supplemental benefits and while they are tied to healthcare plans, they are not subject to the healthcare plan design. This means that even if a healthcare plan does not include abortions as an eligible medical expense, FSA funds may still be used to pay for a legal abortion. This is because FSAs adopt the IRS definitions of eligible medical expenses outlined in Publications 969 and 502. According to the IRS, legal abortions qualify as eligible medical expenses.
HSAs and abortion coverage:
Need a refresher on HSAs?
A health savings account (HSA) is a supplemental benefit to a high-deductible health plan (HDHP). An HSA enables an employee to contribute up to a certain amount of money each year into a special account. The money that is contributed is not subject to taxes and can be used for out-of-pocket healthcare expenses.
- Employers may contribute to HSAs but are not required to.
- HSAs roll over from year to year, so any unused funds can be retained.
- If an employee gets fired or quits, the HSA funds are safe; they remain with the employee.
Like FSAs, HSAs are supplemental benefits. HSAs are always tied to a high-deductible health plan (HDHP); however, even if the HDHP design does not include coverage for abortions, an HSA may still be used to pay for this medical care (as long as the abortion is legal). This is because–like FSAs–HSAs adopt the IRS definitions of eligible medical expenses outlined in Publications 969 and 502. According to the IRS, legal abortions qualify as eligible medical expenses. It’s important to know that before HSA funds may be used, the plan deductible must be met.
HRAs and abortion coverage:
Need a refresher on HRAs?
A health reimbursement arrangement (HRA) is a benefit that provides employees with assistance for out-of-pocket medical expenses. Employees are not permitted to contribute to an HRA—it is entirely funded by the employer, and all HRA funds are tax-free (so they are not viewed by the IRS as income).
- Employers may contribute.
- In certain cases, HRA funds roll over from year to year, so any unused money is retained (this varies by employer-plan design, as some employers may elect to not have funds roll over).
- In an employee gets fired or quits, the HRA funds are returned to the employer.
While there are different types of HRAs (some HRA plans are offered in conjunction with a group health plan—others are not), any HRA can be used to cover legal abortions.
Considering that many Americans will now be crossing state lines for abortion services, these tax-free funds will be critical in helping to support travel and lodging.
It is important to consult individual plan documents to understand coverage, but, as mentioned above, these funds are likely to adhere to IRS definition of eligible medical expenses (which includes abortions). As long as the travel and lodging are considered essential for this medical care, these expenses may be reimbursable. (However, it is important to note that for HSAs, employees must meet their deductible in order to use these funds for abortions or abortion-related services.)
Tax-free reimbursable travel expenses may include:
- Bus fare
- Train fare
- Plane fair
For lodging, up to $50 per person, per night may be reimbursed as long as the following requirements are met:
- The lodging is primarily for and essential to the medical care
- The medical care is provided by a doctor and performed in a medical care facility or hospital
- The lodging is not extravagant
- The lodging is not being used for pleasure or recreation
Are employees required to provide “substantiation” to employers in order to be reimbursed for an abortion (or travel/lodging for an abortion) through an HSA, HRA or FSA?
In order to be reimbursed, employees are often required to prove (using documentation) to the employer that the funds were, in fact, used for medical care. This requirement varies across these tax-free funds:
|The IRS requires that employees provide documentation that proves the funds were used for eligible expenses.||There is no requirement to provide any kind of proof to employers.||The IRS requires that employees provide documentation that proves the funds were used for eligible expenses.|
When an employee provides documented proof of medical care, the employer is exposed to protected health information (PHI) and is then responsible for protecting the employee’s privacy by maintaining confidentiality and carefully storing records in a secure place.
Employers should create guidelines and policies to protect employee privacy or consider using a third party to handle this information.
Is the abortion pill covered by health insurance?
The abortion pill (also known as medical abortion) accounts for over 50 percent of all abortions in the country. Both legislative policy and health benefit coverage around the pill align with policy around the procedure. In other words, states that ban abortion procedures also ban the pill (and it is illegal to ship the pill to a banned state); similarly, health insurance plans that cover the procedure are likely to cover the pill.
NOTE: The abortion pill is any pill that contains the medication mifepristone—this is not the morning-after pill (sometimes known as emergency contraception or Plan B). The morning-after pill remains legal and is distributed over-the-counter in all 50 states.
See this guide to understand the differences between these two medications.
Can an employee use FMLA to cover leave time for an abortion, travel, and recovery?
This isn’t clear and the Department of Labor (DOL) has not provided adequate guidance on this; while it seems likely that FMLA can be used to cover leave time, clarity is required to make this determination. (If and when guidance is issued, this post will be updated.)
Are abortion costs tax-deductible as a medical expense?
Only for legal abortions (in states where the procedure/pill is dispensed legally). According to the IRS, abortions are considered medical care.
Can a company or employer be exposed to liability if assisting employees with inter-state abortion travel?
As of August 2022, inter-state travel for abortion is legal. Justice Brett Kavanaugh publicly stated those who travel to neighboring states will be protected by the constitutional right to interstate travel, however, there is no guarantee that states will not take steps to prevent travel.
NOTE: Texas and Oklahoma state laws allow private citizens to sue anyone who “aids or abets” an abortion of a state resident after this time period—even if the abortion takes place in a state where abortion is legal.