Many employers want to help employees expand their families by offering assistance to address fertility issues. Historically, however, offering standalone fertility benefits has been challenging because they are generally treated as medical benefits and do not fit within an existing excepted benefit category. As a result, employers seeking to offer fertility-specific coverage often were required to integrate those benefits with a broader group health plan, limiting plan design flexibility and complicating administration.
To address these issues, the Departments of Labor, Health and Human Services and Treasury recently issued proposed regulations that would create a new category of “excepted fertility benefits” under the existing HIPAA and ACA excepted benefit framework.
If finalized, the proposal would create an additional pathway for employers to offer fertility-related coverage outside of traditional major medical plans by treating certain fertility benefits similarly to limited-scope dental and vision benefits. Finalizing the proposed regulations would establish a clearer framework for offering fertility benefits on a standalone basis and provide employers with additional flexibility in structuring and delivering those benefits to employees.
Importantly, these regulations remain in the proposal stage. Employers should not implement plan changes or redesign existing fertility programs in reliance on the proposal unless and until final regulations are issued (or the agencies expressly permit interim reliance).
Proposed Excepted Fertility Benefits
Under current law, excepted benefits are generally exempt from many market reform requirements that apply to group health plans, such as the prohibition on lifetime or annual limits. Existing examples include limited-scope dental and vision benefits and integrated health reimbursement arrangements. The proposed regulations would add fertility coverage as a new category of excepted benefits, potentially allowing employers to offer fertility-related coverage on a standalone basis outside of their traditional major medical plans.
Covered Fertility Services May Extend Beyond IVF
The proposal adopts a broad definition of fertility benefits. To qualify, substantially all covered services must relate to the diagnosis, mitigation or treatment of infertility or infertility-related reproductive health conditions, and substantially all services must be provided by appropriately licensed medical professionals. The agencies specifically recognize that fertility treatment may involve both direct reproductive interventions and treatment of underlying medical conditions contributing to infertility.
Limiting Requirements Would Apply
To preserve the “limited benefit” status of current excepted benefits, the proposed regulations impose several restrictions. First, fertility benefits must remain limited in scope and focused on infertility-related services. Second, the proposal imposes a lifetime maximum benefit of $120,000 per participant, indexed for medical inflation beginning after Dec. 31, 2027. The agencies selected a lifetime limit rather than an annual limit because fertility treatment, specifically IVF, often requires multiple treatment cycles. Additionally, employers offering excepted fertility benefits would be required to provide participant notices describing the coverage and satisfying specified disclosure requirements.
Structural Requirements for Employer Plans
The proposed fertility benefit would qualify as an excepted benefit only if it is:
- Provided under a separate insurance policy, certificate, or contract; or
- Otherwise structured so that it is not an integral part of the employer’s major medical plan (e.g., a self-funded arrangement where the employer maintains the fertility benefit separately, makes traditional group health coverage available to those same participants and allows employees to enroll in the fertility benefit even if they decline the major medical coverage).
This approach mirrors the existing rules applicable to limited-scope dental and vision benefits. Employers could continue offering broader fertility coverage through traditional group health plans. The proposed regulations would simply provide an additional option.
Effective Date
If finalized, the proposed regulations generally would apply to plan years beginning on or after Jan. 1, 2027.
Practical Takeaways for Employers
While the proposal could ultimately provide employers with additional flexibility to offer standalone fertility benefits, the regulations remain proposed only, and employers should not make plan amendments or redesign existing fertility programs at this time unless future guidance permits interim reliance. Employers may, however, wish to begin reviewing current fertility offerings and vendor arrangements and monitor future developments to evaluate whether existing programs could potentially fit within the proposed excepted benefit framework if the regulations are finalized.
Warner Norcross + Judd Has You Covered
If you would like assistance reviewing existing fertility benefits, evaluating vendor arrangements or monitoring developments regarding the proposed excepted fertility benefit rules, please contact Stephanie Grant, De’Andre Robbins or your Warner attorney.
