Dobbs Decision: Impact on Cafeteria Plans and Medical Travel

On June 24, 2022, the United States Supreme Court issued its decision in Dobbs v. Jackson Women’s Health Organization (Dobbs). The decision explicitly reverses Roe v. Wade, leaving it to the states to decide on the legality and limits to abortion. Because of the Dobbs decision, we are receiving questions about coverage of travel expenses for abortion services. Particularly how those expenses can be covered through a Health Flexible Spending Account (Health FSA), Health Reimbursement Arrangement (HRA), Excepted Benefit HRA (EBHRA), Health Savings Account (HSA), and possibly a stand-alone such as an Employee Assistance Plan (EAP).   While these travel expenses could be covered by an employer’s major medical group health plan, these FAQs are limited to “flex type” benefits. Even under an employer’s major medical group health plan, there are some concerns, such as amending the plan, administration concerns, etc., but those issues are beyond these FAQs. These FAQs are limited to abortion travel and coverage for the abortion itself would be determined under the terms of the employer’s major medical group health plan.

Coverage will first depend on whether travel expenses are “medical care” for the purposes of Internal Revenue Code (Code) section 213(d).

Is abortion travel “medical care” for purposes of Code section 213(d)?  

Yes, if the abortion is obtained in a jurisdiction where it is legal. Medical care under Code Section 213(d) includes “amounts for transportation primarily for and essential to” medical care. The medical care itself also has to be legal in order for the tax-favored treatment to apply. Travel for an abortion obtained in a state where the procedure is illegal would not qualify.

Are there limits for medical travel reimbursement under Code section 213(d)?

Yes. IRS guidance does limit non-taxable reimbursement  for medical travel:

  • Lodging is capped at $50 per night per person.
  • If traveling by automobile, the medical standard mileage rate is less than the mileage rate for business travel purposes at 22 cents per mile for the remainder of 2022.
  • Other modes of travel (train, plane, bus, etc.) are permitted without an express limit, but in all cases, the transportation must be primarily for medical care and not for non-medical purposes.
  • Meals can be reimbursed only if obtained within the hospital (or similar institution) where the procedure is performed.
  • Travel expenses for medically necessary travel companions, such as the parent of a minor child, are also covered under these rules.

As mentioned above, while the most direct route to reimbursing abortion-related travel expenses for employees is through the employer’s major medical group health plan, if that plan does not cover the travel expenses, they could still be reimbursed under an FSA, HRA, EBHRA, HSA or possibly an EAP.

Can an employer reimburse abortion travel expenses in excess of the limits under Code section 213(d)?

Any reimbursement for abortion-related travel in excess of Code section 213(d) limits is subject to taxation. This can create payroll and administrative challenges because amounts are subject to income and employment tax withholding.

Can abortion travel expenses be reimbursed through an HRA or Health FSA?

Yes, abortion travel can be reimbursed through either an HRA or the Health FSA, subject to the rules governing both types of arrangements/accounts. For example, Health FSAs are subject to contribution/benefit limits. HRAs have no required limits, but there are almost always limits based on plan design. For traditional HRAs, the employee must be enrolled in other group health plan coverage.   HRAs and FSAs can interfere with the ability to contribute to an HSA unless they meet certain additional requirements. If there is an existing HRA or FSA, then those design concerns should have already been addressed, and the decision will just be whether to add abortion travel as a permitted expense. If the plan design is that the HRA or FSA will cover any Code section 213(d) expense, then abortion-related travel expenses are likely currently covered. If a new HRA or FSA is being added, then TRI-AD will, of course, help you set up the plan in a compliant manner.

In the case where an HRA or FSA does not cover all Code section 213(d) expenses, a decision needs to be made as to whether reimbursements will be restricted to abortion-related travel or whether other types of medical travel will be included. In both cases, substantiation of the medical services received will be required (see discussion below).

For employers who want to offer abortion travel benefits to all employees and not just those enrolled in the group health plan, employers may consider offering an EBHRA; however, this type of HRA has additional compliance concerns, as discussed below.

Lastly, if medical travel is restricted only to abortion travel, there may be issues under the Mental Health Parity and Addiction Equity Act (MHPAEA). Under MHPAEA, benefits for mental health/substance abuse cannot be more restrictive than benefits for medical/surgical benefits. Because of the novelty of this issue, we have not seen challenges in this area, but MHPAEA compliance failure remains a risk if a travel benefit is limited to abortion only. This risk could be reduced by expanding the travel benefit to include medical travel for any covered service under the plan, medical travel for covered services that cannot be obtained within a certain geographical radius, or specifically including travel for mental health/substance abuse services in addition to abortion travel.

EBHRA: What are the requirements and the compliance concerns?

EBHRAs are non-integrated HRAs that qualify as excepted benefits under health care reform but subject to limitations discussed below. EBHRAs are flexible in that they can be used by employers of any size and can be used by employees not enrolled in the employer’s major medical group health plan; however, there are several requirements that need to be met:

  • EBHRAs must be available to all similarly situated employees under the same terms and conditions. HIPAA nondiscrimination rules are used for purposes of defining “similarly situated.”
    • There are some unresolved questions that if the benefit is “locked down” to abortion travel and, therefore, women, whether that would satisfy the similarly situated requirement.
  • The employer must make other nonexcepted, non-account-based group health plan coverage available to the EBHRA participants for the plan year. The participants do not actually have to enroll in such primary coverage.
  • Dollar limits for EBHRAs are $1,800 for 2022 and $1,950 for 2023.
  • Reimbursements can be made for out-of-pocket 213(d) medical expenses, but there are restrictions (no reimbursement for premiums for individual health coverage, Medicare, or non-COBRA group coverage).
  • Non-federal governmental EBHRAs have some notice requirements that include notice that explains conditions of eligibility; annual/lifetime caps and other limits on benefits; a summary of the benefits.

EBHRA Compliance concerns

Although EBHRAs are not subject to certain health care reform mandates or HIPAA’s portability and nondiscrimination rules, these plans raise other compliance issues:

  • EBHRAs are ERISA plans (e.g., plan documents, claims procedures, SPD requirements, Form 5500)
  • Participants are entitled to COBRA if they lose their EBHRA coverage as the result of a qualifying event.
  • Code Section 105(h) nondiscrimination rules.
  • HIPAA’s privacy and security requirements. Reimbursements require substantiation, so the targeted medical care documentation is needed, which raises HIPAA concerns.

An employee’s participation can also impact other account-based benefits, like other existing HRAs, and FSAs. EBHRAs can disqualify a person from participating in an HSA because the EBHRA provides a benefit below the high deductible health plan (HDHP) deductible.

What kind of documentation is required to reimburse abortion travel benefits under an FSA or HRA/EBHRA?

To maintain the tax-favored status of an FSA or HRA/EBHRA, the expenses need to be properly substantiated. For medical travel, this means both the cost of the travel itself (e.g., airfare, lodging, mileage) and proof that the travel was for a qualified medical expense. Even if a participant is not enrolled in the employer’s major medical group health plan, proof of the abortion would still need to be provided in order to substantiate the claim for the travel portion of the total expense. Self-substantiation is not acceptable for FSAs and HRAs.

Generally, claims must be substantiated with two types of information (note that this applies to both the travel expense and the abortion itself):

  • Documentation or information from an independent third party describing the service, the date of the service, and the amount of the expense. This would apply to the travel expense (e.g. a plane ticket, lodging receipt, etc.) as well as the abortion itself to prove that the travel was for a medical expense;
  • A statement from the participant that the medical travel expense has not been reimbursed and that the participant will not seek reimbursement for the expense under any other health plan coverage (this would apply just to the travel expense and not to the abortion itself); and
  • The claims must be independently reviewed by someone other than the plan participant in order to determine whether all the requirements have been met.

Because of HIPAA and other concerns, generally, an employer will go through its TPA, like TRI-AD, to administer an HRA, EBHRA, or FSA.

Can abortion travel expenses be reimbursed through an HSA?

Yes. Because medical travel is a Code section 213(d) expense, travel for a legally obtained abortion should be a qualifying medical expense. Third-party adjudication is not required for distributions from an HSA. The individual is responsible for maintaining their own records to show that their expenses are qualified medical expenses. The employer plays no role in substantiating HSA distributions.

Can abortion travel benefits be provided through an EAP?

Technically, medical travel is a medical benefit, and EAPs that provide medical benefits are group health plans and may be subject to health care reform and other mandates. To be exempt from health care reform, an EAP must qualify as an “excepted benefit.” EAPs need to satisfy the following conditions to be an excepted benefit and avoid some of the additional compliance issues associated with group health plans:

  • Benefits cannot be “significant benefits in the nature of medical care.” Currently, there is limited guidance on what constitutes a “significant” benefit. Even if abortion travel alone would not be “significant,” there remains some question as to whether adding this benefit to existing EAP benefits could tip the balance from insignificant to significant. And for example, the expense for plane fare for abortion travel alone could be considered “significant.”
  • EAP benefits cannot be coordinated with benefits under a group health plan, so eligibility for the EAP cannot be conditioned on being enrolled in the group health plan.
  • Participants cannot be charged a premium or any cost-sharing to participate in the EAP. The employer must fully fund the EAP.

However, if medical travel benefits are viewed as “significant” rather than as an “excepted benefit,” the EAP would be subjected to health care reform mandates like preventive services and no annual limits (which the EAP could not meet). Assuming, though, that an EAP could satisfy the excepted benefit conditions for a medical travel benefit, the following issues remain:

  • To maintain tax-favored treatment, the medical expense would need to be substantiated, which would require compliance with HIPAA.
  • COBRA issue—to be an excepted benefit, the EAP needs to be offered to all employees, which creates a COBRA obligation to employees outside of the group health plan.
  • If the travel benefit is restricted to abortion, MHPAEA compliance may be an issue, as already discussed above. This risk could be reduced by expanding the travel benefit to include medical travel for any covered service under the plan, or at least including travel for mental health/substance abuse services.

What if a state attempts to ban abortions obtained outside of the state? What if a state attempts to ban reimbursement for abortions?

As stated above, to be covered by Code section 213(d), an expense must be legal. What happens if a state tries to make the travel benefit “illegal” by either banning its residents from receiving abortions out of state or by banning reimbursement of travel expenses is yet to be tested. What about state laws that ban aiding or abetting abortions?

A state law banning an individual from traveling to another state to receive an abortion may well be unconstitutional, even in light of Dobbs. ERISA also preempts certain state laws, especially those that attempt to govern self-insured plans such as Health FSAs, HRAs, EBHRAs, and generally EAPs.  If a law is preempted, it means that it cannot be enforced against a plan. But preemption generally it requires a final court decision. That means whether any current or future state law that impacts travel for abortion is preempted likely will not be resolved in the near future, and any potential litigation could last several years.

The ERISA preemption analysis is complicated and would need to be on a state-by-state basis. Because of this complexity, and because of the criminal nature of many laws, legal counsel should always be consulted.

What should employers do now?

Employers should discuss these complicated issues with insurers, benefits consultants, and legal counsel to weigh all of the risks. Also recognize that the situation with respect to state laws is highly fluid and will change significantly in the coming months. Employers will need to determine the state abortion laws where their employees reside and should review their reimbursement plan documents to see if travel costs associated with an abortion may be reimbursed. If the plan document does not allow these expenses, an employer can amend their plan. They should also speak with their service providers to see if they can accommodate the travel related reimbursements. As with any benefit change, employee communications will need to explain what is changing and any new benefit provided.

If you have any questions, please contact your TRI-AD Client Service Manager.


TRI-AD and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice and TRI-AD may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state, or local; and/or its application to the clients’ business activities.