Compliance Considerations for Medical ‎Travel Reimbursement | Locke Lord LLP


Employers may consider offering medical travel and lodging reimbursements to allow workers residing in a state where abortion is no longer legal to travel out of state for such services. There are a number of ways to design a medical travel reimbursement program, each with compliance considerations. Below are some questions and answers that briefly describe various options that may be available. Each option comes with different compliance risks. In addition, before introducing new benefits, employers should consider state civil and criminal laws that may prohibit the provision of this type of assistance to employees.

Can a group health plan pay for an employee’s travel and accommodation expenses related to accessing reproductive health services?

Yes. A group health insurance plan can cover travel expenses associated with accessing medical care, including reproductive health and abortion services. The Internal Revenue Code specifically states that medical care includes amounts paid for transportation primarily for and essential to medical care related to the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of Affecting a structure or function of the body.” The IRS confirmed that since an abortion serves the purpose of affecting a structure or function of the body, its cost is an amount paid for medical care. In this context, would be expenses for travel to a state where abortion is legal, as medical care reimbursable under an employer’s group health plan (if otherwise covered by the terms of the group health plan).

Employers should review their existing group health insurance plans to determine if the plan offers travel benefits. Most employer plans offer some form of travel allowance, typically for transplants or travel to centers of excellence/preferred medical centers. This option may not be available under a fully insured plan issued in a state that restricts access to abortion, but might be available under a fully insured plan issued in a state that restricts access to abortion not restricted, or for a self-funded plan. It is important to carefully review the terms of the plan as there may be a general exclusion that could apply to prevent coverage.

Note that all travel and accommodation expenses reimbursed through the Group Health Plan are limited to those employees/dependents who have enrolled in the Group Health Plan. Employers should confirm with their third party administrator that the administrator will manage all enhanced travel benefits and work with their ERISA advisor on any necessary plan changes.

Can group health insurance reimburse reproductive health-related travel expenses tax-free?

Yes, subject to IRS travel expense limits. Travel expenses incurred in traveling to a state to obtain a legal abortion may be reimbursed as tax-free medical expenses under an employer’s group health insurance plan. Tax laws limit the amount of tax-free reimbursement for travel and accommodation expenses and do not allow tax-free reimbursement for meals.

Can an employer provide abortion-related travel allowance to all employees, including those employees who are not enrolled in their group sickness plan?

Yes. An employer may offer all employees a travel expense reimbursement program outside of their health insurance plan, either through an existing Health Insurance Agreement (HRA), an Employee Assistance Program (EAP), or a Flexible Health Expense Plan (Health FSA).

  • sick pay scheme. An employer could offer travel and lodging reimbursement under an HRA. However, to avoid an HRA violating the requirements of the Affordable Care Act, the HRA must be structured as either an “integrated” HRA or an “exempt” HRA. Integrated HRAs must be offered in conjunction with a group health plan that meets the ACA minimum requirements and may only be offered to individuals covered by such plans (including another employer’s group health plan). Exempted HRAs may reimburse travel expenses related to medical care, including abortion services, but this reimbursement is capped at $1,800 per year.
  • Employee Assistance Program. EAPs are generally offered to all employees (and their dependents), regardless of whether the employee is enrolled in the employer’s group sickness plan. The EAP must be structured as an “optional benefit” to be exempt from the requirements of the Affordable Care Act. To be an exempt service (1), the EAP cannot provide “substantial services in the nature of medical care”; (2) the EAP cannot be coordinated with benefits under a group health insurance plan; (3) Services under the EAP cannot be funded by another group sickness plan; (4) no employee awards or contributions are required as a condition of participation in the EAP; and (5) there is no sharing of costs under the EAP.
  • Flexible healthcare spending account. Health FSAs may reimburse reasonable medical travel expenses. An employee is not required to be enrolled in the employer’s group sickness plan in order to contribute to a healthcare FSA. Note that health FSA contribution limits are capped at $2,850 for 2022.

These types of programs must be carefully structured to comply with applicable federal laws such as ERISA, the Affordable Care Act, COBRA, and HIPAA.

Can an employer limit travel benefits to only abortion-related travel?

Unlikely. In the event that an employer’s group health plan covers Mental Health or Substance Use Disorders (“MH/SUD”) benefits, the plan must comply with the Mental Health Parity and Addiction Equity Act (“MHPAEA”). In general, a healthcare plan under the MHPAEA cannot impose more restrictive financial requirements or treatment limitations (both quantitative and non-quantitative) for MH/SUD services than medical/surgical services. Separate treatment restrictions that apply only to MH/SUD benefits are prohibited. By making travel benefits available only to individuals who desire an abortion (an MS benefit), the group health plan could violate the MHPAEA because an individual claiming MH/SUD benefits cannot receive a travel benefit and is subject to a more restrictive treatment restriction.

Can an employer provide a taxable travel allowance related to an abortion?

While it may be possible, a taxable travel benefit associated with an abortion carries several risks. There would be no ERISA pre-emption argument to attempt to avoid certain state civil enforcements. Employees may be reluctant to submit information to the employer to obtain compensation for travel expenses because it is their confidential health information and they are not required to disclose it to the employer. The IRS could consider the reimbursement program to be an employer payment plan, which is a “group health plan” that does not comply with the Affordable Care Act unless it is integrated with a large medical health plan that does comply with the Affordable Care Act. Additionally, if it is a group health plan, other laws such as HIPAA apply.

We have a high deductible health insurance plan. Can we pay for abortion-related travel before a participant meets the plan’s deductible?

no A high-deductible health insurance plan cannot reimburse for benefits other than those required by the Affordable Care Act until the participant meets the plan’s deductible. If the plan is paid for abortion-related travel before the plan’s deductible is met, the plan would not be considered a high-deductible health plan that entitles a participant to make contributions to a health savings account—and accordingly, the participant would not be eligible to make contributions make health savings account contributions as a result.

Could an employer or plan administrator face civil lawsuits or criminal violations in states that ban or severely restrict abortion?

Possibly. After many companies announced they would cover travel expenses and the cost of out-of-state abortion procedures, pro-choice advocates in many states have announced their intention to expand the civil and criminal provisions of their abortion laws.While ERISA pre-empts state laws relating to employee benefit plans, ERISA does not pre-empt “any generally applicable criminal law of any state.” The criminal justice carve-out prevents common criminal behavior from being immunized from law enforcement simply because it “refers” to an ERISA plan. Accordingly, courts have understood by “generally applicable” criminal laws to be those that generally prohibit conduct and apply to the entire population.

Some state criminal statutes specifically target employers who pay for voluntary abortions with criminal penalties. In addition, the general criminal law provisions of the State relating to aiding and abetting a crime could apply to the provision of financial assistance for obtaining an abortion, such as: ‎However, there is no precedent for criminalizing acts expressly permitted by the terms of a group health plan. Whether these penal laws are considered “of general application” therefore remains an open and country-specific question.


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