Employer-paid abortion travel coverage leads to tax consequences

Lawyers said employers looking to provide a safe haven by covering workers’ out-of-state travel costs for abortion services must also contend with tax and benefits laws and consider the potential tax burden for employees.

Employers prepare to overturn expected US Supreme Court ruling Raw vs. Wadea 1973 decision that legalized abortion, by offering benefits to employees.

Six states, including California and New York, require abortion coverage in private health insurance plans, according to the Guttmacher Institute. 11 states have laws going in the opposite direction, restricting abortion insurance coverage in all private insurance plans written in the state, including those offered through health insurance swaps established under the Affordable Care Act.

Adding medical travel coverage and reimbursing labor costs on a tax-exempt basis involves benefit laws, Edward Bernard, partner and shareholder of Hanson Bridgett in San Francisco, said. This means that employers must deal with compliance issues under the Employee Retirement Income Insurance Act, the Health Insurance Transfer and Accountability Act, and the Uniform Comprehensive Budget Adjustment Act, also known as COBRA.

“I think the main thing we’ve heard is that employers are going to have to deal with this travel compensation,” Bernard said.

The average out-of-pocket cost for an affiliate who uses any abortion service and has a cost-sharing is $543, according to a California legislative analysis. The average cost share is $306 for a medical abortion, $887 for a procedural abortion, and $182 for associated services. This is without travel costs. California in March enacted legislation banning abortion cost sharing. New York and Illinois have similar restrictions.

The Kaiser Family Foundation said that many large employer plans already cover workers’ travel expenses for certain out-of-state health care procedures. The benefit is typically offered to reduce health costs, and only for specific costly procedures such as hip and knee replacements, the foundation said, through partnerships with large health systems.

Sharon Burley Masling, partner at Morgan Lewis and director of Workplace Culture Consulting, said that travel expenses may be reimbursed tax-free up to certain limits if an abortion is the primary purpose of the trip.

“Expenses in excess of these limits may be reimbursed on a taxable basis, which means that the employer will need to withhold employment taxes for the excess amounts. We do not believe that providing taxable compensation through a medical plan will impact the The tax treatment of coverage under the plan as a whole, but the law isn’t entirely clear on this.”

“Employers should generally be able to deduct refunds, regardless of whether the reimbursement is taxable for the employee,” she added.

For employers in multiple states, whether and to what extent different state abortion laws will affect employer-sponsored benefit plans will depend on the final decision in Dobbs vs Women’s Health Jacksonwhich is expected to collapse Raw vs. Wade Masling said, the exact limitations of each state’s law.

“Some laws prohibit abortion entirely, while others place additional restrictions on the practice. Open-ended questions include the extraterritorial application of these laws and the applicability of ERISA safeguards. These issues are likely to be the subject of ongoing litigation and discussion,” she said.

Employment repercussions

Companies including Levi StraussAnd the LiftAnd the H&M She signed a statement Do Not Prohibit Equality which argues that the Abortion Restriction Act is bad for business. “It impairs our ability to build diverse and inclusive pipelines of the workforce, hire top talent across states, and protect the well-being of all the people who keep our business thriving day in and day out,” the statement said.

Economic losses from current abortion restrictions, including the impact of the workforce and profits, are already costing the nation’s economies $105 billion annually, according to a report by the Institute for Women’s Policy Research. The number is based on lost wages, labor turnover, and low labor participation rates.

Companies are talking about a possible coup Ro Represents a small piece of American companies. It is likely that employers who have not made public statements are still trying to figure out how to respond on behalf of their workers.

Pending the filing of the case, Jackson Lewis side law firm has assembled a team of attorneys including benefits attorneys “to answer clients’ questions about how to help their employees exercise reproductive rights and obtain medical care if they live in a state that may not allow it,” he said. Said Eklmana director in the New York office.

He said a lot of customers ask questions Melissa OstroorCo-chair of the Jackson Lewis Advantage Group in New York City. “We advise companies to the extent that they have to take advantage of travel, to include it in their health plan for a variety of reasons, including potential preventative measures. We also advise employers to keep the scope of the benefit to the maximum and to the maximum extent possible, because it is more Expensive like that,” Osterroyer said.

Eckelman added: “This, of course, adds a cost, but again, because at that time it has a broader set of travel benefits, but it may be more defensible in the future.”

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