Employer Coverage of Travel Costs for Out-of-State Abortion
A growing number of states are passing laws restricting access to abortion ahead of the Supreme Court’s ruling in the Dobbs v. Jackson case. Should the Court overturn Roe v. Wade and eliminate the federal standard regarding abortion access, states would set their own standards, banning or protecting abortion access. As employers come to terms with the fact that their workers may not be able to get abortion services where they live, some have begun taking action to support access to abortion for their workers or dependents who live in states that would ban it. In addition to the cost of abortion care, some people may be faced with travel expenses, which could present a sizeable financial barrier, particularly for lower-wage workers. There has been recent attention to employer actions to pay the travel costs for workers who need to go out of state to obtain an abortion, but its utility will depend on how the benefit is administered.
What’s Happening Now
Many large employer plans already cover workers’ travel expenses for certain out-of-state health care procedures. This benefit is typically offered to reduce health costs, and for only specific expensive procedures such as hip and knee replacements, via partnerships with large health systems.
However, this benefit differs in intent from corporate actions making headlines lately, where companies are publicly announcing that they will cover travel expenses for workers who need to travel out-of-state travel for abortion if it is banned where they live. Yelp, Citigroup, Apple, Microsoft, and Amazon are among the growing number of large companies that have announced this benefit. It is worth noting that it is not clear from public information what level of coverage their health insurance plans provide for abortion services in- or out-of-network or whether their provider networks even include clinicians who provide abortion care. Some employers had already been covering travel costs for workers to access certain health care services that are not available in their home state, including abortion, and there are likely others who are newly adding this benefit more privately.
Why It Matters
Workers seeking an abortion in states with restrictive abortion laws may have to travel to another state with fewer restrictions. In addition to the cost of the abortion, which typically ranges from $450 to $600 for the majority of self-pay abortions, these individuals may face travel expenses that could add up to hundreds or even thousands of dollars, depending on how far they must travel. The Federal Reserve Board found over 35% of U.S. adults do not have enough in savings or cash equivalent to pay for a $400 emergency expense, meaning that for many individuals, these costs can be prohibitively expensive. For employers with a large lower-wage workforce, this could be an especially meaningful benefit, as many would lack the resources to afford airfare, gas, lodging, and other travel-related expenses. While most of the large companies that have announced these travel benefits have a substantial higher-wage workforce who are more likely to be able to absorb travel costs without additional financial support, some companies have pledged to make this benefit available to hourly and retail workers, who tend to be lower-wage.
Many employers who offer this benefit do so through their health insurance plans. Including this benefit as part of the health plan might help mitigate worker privacy concerns since health insurance plans and employer-sponsored self-funded plans are subject to the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the federal privacy law. However, people within an employer involved in administering the health plan might still have access to the information. Also, this approach may not extend to workers who would most benefit because part-time and hourly workers may not be eligible for the employer’s health insurance plan, and lower-wage workers may be enrolled in Medicaid or ACA Marketplace plans instead.
Other employers have set up a separate fund outside of their health insurance plan that workers access via their human resources department. However, workers may not be comfortable disclosing to their employer that they are seeking an abortion out of concern for confidentiality or possible discrimination. The federal Pregnancy Discrimination Act, Americans with Disabilities Act (ADA), and Family and Medical Leave Act of 1993 (FMLA), as well as some state laws, may protect workers from discrimination or retaliation by their employer with regard to accessing an abortion more broadly. In addition, abortion is still highly stigmatized, and workers may not want their employers to know that they have used or applied for this travel benefit. How employers are structuring this travel benefit outside of the health plan – including whether it would be taxable for workers — is unclear.
Regardless of whether the employer provides the travel benefit through their health insurance or a separate program, affordability could still be a problem for lower-wage workers if the employer’s program requires workers to pay upfront and get reimbursed for expenses. These costs could be prohibitive for lower-income workers who may not be able to afford the upfront travel costs or have a credit card to charge the expenses.
Legal and Political Considerations
The potential legal implications for employers covering workers’ travel costs in a state with an abortion ban are still murky and untested. Many employers that are offering this benefit are incorporating it into their health insurance plans. The majority of large employers have self-funded health plans, meaning they are not regulated by states and therefore, state laws restricting abortion coverage or access do not apply to these plans. However, whether a state criminal law could be used against an employer that pays workers’ travel costs for an out-of-state abortion through a self-funded health plan is an open question.
Shortly after Citigroup made its announcement that they would cover travel costs to obtain an abortion, a Texas state legislator accused the company of violating its state law that bans abortion after 6 weeks and which includes civil penalties for anyone who “aids or abets” an abortion outside of that timeframe. In the U.S. House and Senate, Republican lawmakers are also advocating for financial penalties for companies that cover workers’ travel costs to obtain an abortion.
Other Cost Considerations
Employers trying to extend additional benefits to help workers access abortion care may want to review their health plan coverage, including deductible levels, to make these benefits meaningful to their lower-wage workers. In addition to travel benefits, plan design, provider networks, and scope of coverage will also shape out-of-pocket spending. For example, if workers need to first pay a high deductible before their abortion coverage kicks in, they may be left paying the whole amount out of pocket before their coverage applies. Deductibles reached an average of nearly $1,700 for single coverage in 2021, exceeding the average cost of an abortion.
Employers’ choices about the benefits they offer may also be limited by their location. While most employers with self-funded plans are not limited by state coverage restrictions, employers offering their workers fully-insured plans will not be able to cover abortions if they are located in one of the 11 states (including Texas) that ban it in fully-insured employer plans. In states like Texas, this is a reality that employers and workers are already experiencing.