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Dobbs and Employee Benefits Issues: Steps That Employers Should Take to Review Their Benefits Policies

September 16, 2022

By Kevin Hylton

The recent U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization touched off a national political debate about reproductive rights and became the flashpoint for 2022 election campaigns. It also triggered a less-public response from corporate counsel, HR executives, and labor and employment attorneys.

The Dobbs decision, which overturned Roe v. Wade and reversed decades of precedent that established a woman’s constitutional right to an abortion during the first two trimesters of pregnancy, sent U.S. employers scurrying to evaluate their employee benefits plans.

“The high court’s decision in Dobbs v. Jackson Women’s Health allowed states to impose restrictions or outright bans on the abortion procedure,” Law360 Pulse reported. “That’s quickly creating new liabilities for employers related to workers’ health, discrimination protections, privacy and speech.”

In-house counsel and senior HR executives have been seeking counsel to assess whether their existing policies are placing their organizations and/or its leadership in civil or criminal jeopardy, as well as what steps they need to take in response to the many changes happening from state to state regarding abortion access.

“There is no question that Dobbs is having a huge impact on employee benefit plans provided by employers,” said Eric W. Gregory, a partner in Dickinson Wright's Labor & Employment Practice who advises clients in the areas of ERISA, employee benefits and executive compensation. “Some employers have talked openly and frankly about what abortion benefits are going to be available under their plans, while other employers are stepping back and watching how things are going to shake out before making those decisions. But all employers need to be engaging with their benefits counsel to think through what kinds of benefits they want to make available in their plans and what kinds of benefits are now permitted in their plans.”

The Supreme Court’s decision in Dobbs means that individual states can now decide for themselves whether to allow or prohibit abortion within their jurisdictions. This requires in-house and outside counsel to have access to the latest facts on the ground regarding how each state has proceeded to regulate abortion in a post-Roe world. Lexis Practical Guidance has created a helpful tool, State Abortion Laws Tracker After Dobbs v. Jackson Women’s Health Organization, which monitors where different state laws stand on abortion access.

“The complicating factor for employers is that legal abortion access now depends on what states they are operating in, so a big part of the legal analysis is understanding the relationship between state law and ERISA,” Gregory said. “For example, you may have an employee who lives in a state that has now banned abortion but wishes to have an abortion performed in a state where the procedure is legal. The employer needs to ask if they have any criminal liability in that circumstance if they provide benefits that cover the employee’s health care and medical expenses.”

Gregory explained that ERISA has a pre-emption provision, which essentially pre-empts state law in situations where a specific state law interferes with how an employer can provide health benefits uniformly to all of their employees. It is important to understand the nuances of ERISA pre-emption to make sure the company is on safe ground with the employee benefits they choose to provide, he counsels.

Many employers are also responding to the landmark decision by revisiting their employee benefits strategy of whether to self-insure for health insurance coverage or to contract with a commercial insurance company to provide that coverage.

“Over the past 10 years, we have seen a significant increase in the number of companies that self-insure for their employee benefits plans, and the Dobbs decision may accelerate that shift,” Gregory said. “Self-insuring gives employers more control as to what they are going to cover under their plan and what they will not, without any restrictions on what their insurance company is willing to cover. This could be a pushing point that might cause more employers to consider becoming self-insured.”

To learn more about the Dobbs decision and its impact on labor and employment issues, please review the Dobbs v. Jackson Women’s Health Organization Resource Kit from Lexis Practical Guidance.

Gregory is the author of Recovering Plan Overpayments and Missing Participants Policy and Procedures, a practice note and a document template for qualified retirement plan sponsors published by Lexis Practical Guidance.

I had the privilege of interviewing Mr. Gregory on a recent episode of our new “Practical Guidance: Labor and Employment Series” podcast, where we invite experts to provide insights on timely employment law issues facing legal practitioners. Listen now or download the episode regarding how the Dobbs decision may impact the way employers provide medical benefits to their employees.