August 16, 2022

The Federal Government Subsidizes Abortions. Will That Last?

Publication 502 governs here, too, at least in theory. Employers have the ability, if they wish, to exclude some expenses that they don’t want their flexible spending accounts to cover. Already, these exclusions sometimes include abortion.

Could more employers exclude it? Here’s what may have them concerned: Your medical procedures have to be legal ones.

So consider this possibility: An employee in a state where abortions are almost entirely illegal orders abortion pills to her home and then submits the receipt for reimbursement from the flexible spending account. Is it a covered expense? Perhaps, though at some point a state may try to prosecute someone who takes the pills.

Then there’s the employee who travels from a state where abortion is almost entirely illegal to get an abortion in a state where it’s still legal. That procedure may seem fine for reimbursement, but which state’s laws ought to prevail? Or could it depend on where the company’s headquarters are — some third state, perhaps? Again, the risk here could eventually land with the person getting the abortion and not the employer or the plan administrator.

We put the expense eligibility questions to HealthEquity, a leading third-party administrator of these plans. It seems poised to approve abortion-related expenses in all of the above cases, at least for now.

Here’s the company’s reasoning: When it comes to employee benefits plans, federal tax laws and regulations are supposed to be the primary rule-making mechanism. And on June 24, Attorney General Merrick B. Garland put out a statement noting that states cannot prevent residents from traveling to another state for care. Moreover, he pointed out that abortion pills were federally approved.

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