Travel Benefits for Employees - Compliance Considerations
Travel Benefits for Employees - Compliance Considerations
In light of the recent decision in Dobbs vs. Jackson Women’s Health Organization (Dobbs), some employers have expressed interest in how to build a compliant travel benefits plan.
Employers sponsoring travel benefits plans can assist employees who travel out of state for services where access is limited by covering or reimbursing the cost of related travel, lodging, and meals (if the meal is part of inpatient care).
Though the Dobbs’ decision pushed the prospect of medical travel as an employee benefit into the spotlight, these expenses were already eligible for reimbursement from health reimbursement arrangements (HRAs), flexible benefit accounts (FSAs) and health savings accounts (HSAs) under Section 213(d) of the Internal Revenue Code.
Find the full list of expenses eligible for reimbursement in IRS Publication 502.
For employers interested in learning more about how they might offer a travel benefit to their employees, below are a few options and compliance concerns to take into consideration:
Note, this area of compliance is rapidly changing. If an employer is interested in offering some form of a travel benefit, it is recommended they work with experienced benefits counsel.
Health Reimbursement Arrangement (HRAs)
Employers who offer a fully insured medical plan may go the route of offering an HRA to provide reimbursement for employees’ travel expenses under Section. 213(d). As HRAs are considered group health plans under the Affordable Care Act (ACA), the HRA will need to be 1) integrated with a different employer-sponsored group health plan that provides minimum value and 2) offered only to active employees who are enrolled in a group health plan. (For administrative ease, the employer may want to limit HRA eligibility only to those enrolled in the employer’s own group health plan and not that of another employer.)
An HRA can be designed to provide limited Section 213(d) medical expenses. However, if the HRA is designed to provide reimbursement for travel expenses related to abortion care only, it may not comply with the comparability rules under the Mental Health Parity and Addiction Equity Act (MHPAEA).
If the employer offers a qualified high deductible plan (HDHP) and sponsors an HSA in addition to offering an HRA, this arrangement could prevent participants from making HSA contributions. Expenses should be paid with the HRA only after the participant meets the HDHP’s statutory deductible for qualifying medical expenses.
Finally, the Health Insurance Portability and Accountability Act (HIPAA) would apply, subjecting the HRA to applicable privacy and security rules.
Self-Insured or Level-Funded Health Plan
Employers who sponsor self-insured (including level-funded) health plans should work with their third-party administrator (TPA) to determine whether travel benefit options are available and how implementing a travel benefit would impact the plan. Employers may want to explore limiting their plan to providing coverage for travel for abortion services only, or for a wider range of benefits, such as gender affirmation services and/or fertility services. Alternatively, the employer could include coverage for travel related to all services covered under the plan for which access may be limited. These decisions can be made in consultation with the TPA, who can assist with amending the plan in writing and making any determination as to how the stop-loss policy might be affected. And as with HRAs above, the same compliance issues related to HIPAA and mental health parity remain.
Group Health Plan Mandates to Consider
Whether an employer chooses to go the route of offering an HRA alongside their medical plan or decides to build travel benefits directly into their existing self-insured medical plan, there are various group health plan mandates that will apply.
The Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits all fully-insured and large, self-insured group health plans from providing more favorable benefit limitations for medical and surgical benefits than for mental health and substance use disorder benefits. This means that any travel benefit plan may need to take into account how services for mental health care will be included and to what extent. Employers sponsoring a self-insured health plan should be sure to communicate with their TPA about how their plan complies with the mental health parity law. To err on the side of caution, employers sponsoring an HRA may want to design their plan so that it reimburses for all expenses eligible under Section 213(d).
Under Section 105(h), self-insured health plans (including HRAs) are subject to nondiscrimination rules, so employers must take care to design their eligibility so that the plan does not disproportionately favor highly compensated individuals.
Since HRAs are group health plans subject to ERISA, all of ERISA’s reporting and disclosure requirements apply to the HRA, including creating and maintaining a plan document and distributing a summary plan description (SPD). The SPD will be particularly important, as it will outline the complete terms of the HRA in participant-friendly language, including exactly which expenses are eligible for reimbursement, the procedures for how participants’ claims will be reimbursed, and any substantiation requirements.
Similar to a major medical plan, HRAs are also subject to COBRA. Participants who lose coverage in connection with a COBRA-qualifying event may elect and pay for COBRA for the HRA.
Finally, employers sponsoring self-insured health plans (including HRAs) must remember the additional layer of HIPAA compliance that comes with self-insuring. The employer is responsible for full HIPAA privacy compliance, which includes maintaining written policies and procedures, naming a privacy officer, distributing a Notice of Privacy Practices to plan participants, training staff that has access to protected health information, and following all breach notification procedures.
Health Savings Accounts (HSAs)
As discussed earlier, HSAs can reimburse expenses for travel, meals, and lodging under Section 213(d) of the Code if the main purpose of those expenses is to receive medical care.
Employers who sponsor an HDHP and offer an HSA to their employees could indirectly provide funds for medical travel by contributing to their employees’ HSAs. For employers who already offer an HDHP and an HSA to their employees, this strategy may be easier to implement than offering an HRA, as setting up an HRA would interfere with employees’ HSA eligibility, as noted above.
It is important to note that with HSA contributions, employers cannot control or limit what expenses are eligible to be reimbursed from the HSA. Employers also cannot cherry-pick which employees receive an HSA contribution or make a greater contribution to certain employees; if contributions are provided through the cafeteria plan, they need to comply with all nondiscrimination rules under Section 125.
Vacation / PTO
A simpler approach to offering travel benefits for medical care may mean amending an existing PTO or vacation policy. Employers may consider expanding the overall bank of paid time off employees may accrue or receive each year to be used for any purpose. Alternatively, employers may offer a separate bank of paid time off to be used specifically for traveling out of state for medical care needs. However, employers must ensure that this bank is not discriminatory in its purpose or effect. In other words, it must be offered either to all employees or to certain classes of employees that are not based on or affecting any protected categories (e.g., limited to all employees at certain employer facility locations). Also, it should be offered equally regardless of gender. In order to protect employee confidentiality and privacy, employers should limit the information requested from employees to support the use of paid time off under this type of supplemental policy. Finally, keep in mind that expanded or supplemental banks of paid time off would likely be subject to annual carryover and termination payout rules in states where it is required.
As federal guidance continues to be issued and state laws change, employers are encouraged to keep in contact with trusted advisors to understand how these changes can impact health plans. For additional questions, join the upcoming session Employer Considerations in Light of Dobbs Decision.