Employer Coverage of Abortion Travel Costs
Navigating legal, tax, and compliance challenges for companies offering travel benefits for abortion access.
Employer Coverage of Abortion Travel Costs: Legal Pathways and Pitfalls
Following the U.S. Supreme Court’s decision to overturn Roe v. Wade, many states have enacted strict abortion restrictions, prompting employers to explore ways to assist employees who must travel out-of-state for reproductive care. Covering travel expenses—such as transportation, lodging, and sometimes meals—has emerged as a key benefit strategy. However, this raises complex questions under federal tax law, employee benefits regulations, and varying state statutes. Employers must weigh the desire to support employee health against potential legal exposures.
This comprehensive guide outlines viable options for implementing such benefits, tax treatments, compliance hurdles, and practical recommendations. Large self-insured employers, in particular, have flexibility due to federal preemption rules, but smaller firms with fully insured plans face greater constraints.
Understanding the Need for Travel Benefits in a Post-Dobbs Landscape
Abortion bans or severe limits now exist in approximately 14 states, forcing patients to seek services elsewhere. Travel costs can exceed $1,000 per person, combining procedure fees (around $600 for first-trimester care), airfare, lodging, and incidentals. Low-wage workers are disproportionately affected, as upfront payments strain finances.
Employers like Citigroup and others have publicly committed to covering these expenses, signaling a corporate trend toward enhanced reproductive health support. Yet, implementation varies: some integrate benefits into health plans, others create standalone funds. Each approach carries distinct implications.
Tax Treatment of Abortion-Related Travel Under Federal Law
Under Internal Revenue Code Section 213(d), abortion qualifies as ”medical care,” as do associated transportation and lodging expenses (up to $50 per night per person for lodging). This allows tax-free reimbursement through qualified plans. Meals are generally excluded unless tied to away-from-home medical travel, where courts and the IRS sometimes diverge— the Tax Court and Sixth Circuit allow deductions, but IRS rulings occasionally deny them.
For group health plans, covering these costs avoids income imputation for qualifying portions. Excess lodging or meals must be reported as taxable income. Employers using Health Savings Accounts (HSAs) must ensure reimbursements occur post-deductible to preserve tax-qualified status.
| Expense Type | Tax Treatment | Limit | Source |
|---|---|---|---|
| Transportation | Tax-free if medical | Reasonable costs (e.g., 18¢/mile medical rate) | IRC §213(d) |
| Lodging | Tax-free | $50/night/person | IRC §213 |
| Meals | Potentially taxable | N/A (disputed) | Tax Court/IRS split |
| Procedure | Tax-free | None specified | IRC §213(d) |
Integrating Travel Benefits into Group Health Plans
Most large employers operate self-insured group health plans governed by ERISA, which preempts many state laws. This enables coverage of abortion travel without state interference, provided the plan complies with federal mandates like the Affordable Care Act (ACA).
Plans rarely cover routine travel, typically limiting it to “centers of excellence” for transplants or cancer care. Amending for abortion-specific travel risks discrimination claims under Title VII, as it benefits only those capable of pregnancy (disparate impact). Broader policies—covering all medical travel—mitigate this while enhancing equity.
- Self-Insured Plans: Ignore state coverage bans; design freely.
- Fully Insured Plans: Subject to state rules; banned in 11 states like Texas.
- HRA Option: Employer-funded accounts reimburse post-deductible travel for those in group plans.
Parameters matter: Limit to nearest legal provider? Require pre-authorization? These decisions balance access, cost, and administration.
Standalone Programs: Risks and Workarounds
Offering benefits outside health plans avoids ACA issues but forfeits ERISA preemption. A reimbursement program for medical travel could be deemed a separate “group health plan,” violating ACA market reforms if standalone.
Fixed stipends (e.g., $500 flat per trip) reduce this risk over actual reimbursements, though regulators like DOL or Treasury might still classify them as plans. Privacy concerns arise sans HIPAA protections—employees must disclose sensitive info to HR, risking discomfort or ADA/FMLA violations.
State laws complicate matters: Texas’s SB8 imposes civil penalties on “aiders and abettors,” potentially targeting employers. ERISA shields in-plan benefits but not external ones.
State Law Variations and ERISA’s Protective Role
Self-insured ERISA plans preempt state insurance mandates, allowing abortion coverage despite bans. However, criminal statutes (e.g., aiding illegal abortions) remain untested against corporate payers. Republican lawmakers have proposed federal penalties, adding uncertainty.
Fully insured plans in ban states cannot cover abortions. Employers in permissive states face fewer hurdles but must monitor evolving legislation.
Balancing Employee Privacy, Access, and Affordability
Reimbursement models require upfront payments, burdensome for low-income staff without credit. Direct vendor payments or advances improve usability but heighten privacy risks.
Broader benefits (e.g., general medical travel) preserve anonymity—employees submit generic claims. Federal laws like the Pregnancy Discrimination Act and ADA offer some safeguards against retaliation.
Strategic Recommendations for Employers
Consult legal counsel before launch. Preferred path: Amend self-insured plans for comprehensive medical travel, including abortion. Pilot broad stipends if external. Track costs—estimated low utilization offsets premiums.
- Assess workforce geography: Prioritize if many in ban states.
- Broaden scope to avoid disparate impact.
- Ensure post-deductible for HSAs/HRAs.
- Document decisions for fiduciary duty.
- Communicate neutrally to avoid political backlash.
Frequently Asked Questions (FAQs)
Can self-insured employers cover abortion travel legally?
Yes, ERISA preempts most state restrictions, treating it as medical care under tax law.
What if my plan is fully insured?
Coverage may be prohibited in ban states; consider HRAs limited to plan enrollees.
Does HIPAA protect abortion travel claims?
Only if through a group health plan; standalone programs lack these safeguards.
Are there discrimination risks?
Limiting to abortion could trigger Title VII claims; generalize to all medical travel.
How to handle low-wage employees?
Offer advances or direct payments to ease upfront burdens.
Future Outlook and Evolving Regulations
As litigation unfolds, expect clarity on criminal liability. Employers should monitor DOL guidance and state AG actions. Proactive benefits signal commitment to comprehensive care, aiding talent retention amid shifting laws.
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References
- Overview of Legal Issues in Covering Abortion-Related Travel Expenses — HSER Law. 2022-06-15. https://hselaw.com/news-and-information/legalcurrents/overview-of-legal-issues-in-covering-abortion-related-travel-expenses/
- Abortion Travel Expense Options Under Employer Plans — Conner Strong & Buckelew. 2022-07-01. https://www.connerstrong.com/blog/insights-detail/legislative-updates/abortion-travel-expense-options-under-employer-plans/
- Employer Coverage of Travel Costs for Out-of-State Abortion — Kaiser Family Foundation (KFF). 2023-05-10. https://www.kff.org/private-insurance/employer-coverage-travel-costs-out-of-state-abortion/
- Abortion Travel Benefits: What Employers Need to Know — P&A Group. 2022-08-20. https://padmin.com/blog/abortion-travel-benefits-what-employers-need-to-know/
- Tax Consequences of Employer-Provided Abortion Travel Benefits — Thomson Reuters Tax Blog. 2022-07-12. https://tax.thomsonreuters.com/blog/tax-consequences-of-employer-provided-abortion-travel-benefits/
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