The U.S. Departments of Labor (DOL), Health and Human Services, and Treasury announced a proposed rule that would create a new category of excepted benefits, providing employers the choice to offer fertility benefits on a carve-out basis outside of major medical coverage. Learn the proposed requirements for excepted fertility benefits, the design and cost flexibilities available to employers, and the key uncertainties the final rule may need to resolve.

This proposal responds to “employers’ sparse coverage of fertility-related treatments for the American worker and increases benefit options by easing statutory and regulatory burdens to make IVF and other fertility treatments more affordable,” a DOL news release said.

Excepted benefits are generally exempt from many health insurance market requirements under HIPAA, the Affordable Care Act (ACA), the No Surprises Act and related laws. Read our earlier blog for background and an overview of excepted benefits.

Excepted Fertility Benefits

The proposed rule sets the following requirements for excepted fertility benefits:

• Scope of benefit: Substantially, all of the benefits must be for diagnosis, mitigation or treatment of infertility or related reproductive health conditions, and substantially all of which are provided by licensed or authorized medical professionals.
• Dollar limit: Benefits would be capped at a combined lifetime maximum of up to $120,000 for the participant and their beneficiaries, indexed for inflation for plan years starting in 2028.
• Notification: Employers would have to provide a clear notice describing coverage, limits, provider access and claims procedures. This notice must be written in a manner understandable to the average participant and must be provided at the first opportunity to enroll, annually thereafter, and upon request.
• Separate plan: The benefits must be provided under a separate policy certificate, or contract of insurance or otherwise not be an integral part of the plan maintained by the same plan sponsor. In other words, employers would be required to offer participants access to a traditional group health plan; however, participants would not need to enroll in that plan to receive the fertility benefit, according to a DOL fact sheet. DOL noted that the separate plan design may help workers who get medical coverage elsewhere, such as through a spouse, but still want fertility benefits through their own employer.

Employer Choices and Design Flexibility

Under the proposal, DOL outlined flexibilities for employers that choose to offer fertility benefits, such as:

• Whether to provide fertility coverage as a limited excepted benefit, rather than only through major medical coverage
• What items and services are covered (e.g., diagnosis, mitigation, and treatment of infertility, including potentially IVF and non-IVF services, counseling, medications, surgical treatments and services addressing underlying causes of infertility) subject to the proposed scope limits and lifetime dollar maximum
• What level (if any) to contribute to the cost of coverage.

Employer Already Offering Fertility Benefits

The departments assume that plan sponsors that currently cover fertility benefits through their medical plans would continue to offer them, with some even supplementing existing coverage by offering an excepted fertility benefit plan as an additional option to eligible employees. However, it is possible that some plans currently offering fertility benefits through their medical plans would, under these proposed rules, remove such coverage from their existing plan and offer fertility benefits through an excepted benefit plan instead.

Key Unknowns

Since the proposal would create a new limited excepted benefit, the departments lay out some assumptions or areas where they lack data or are uncertain about an impact. They also seek stakeholder feedback on costs, implementation, likely scenarios, etc. Some of the topics where comments are requested include the following.

• What would premiums be set at? Would this vary by plan size?
• Whether and how much employers would contribute toward premium for excepted fertility benefits
• What is the likelihood that employers who currently offer fertility benefits in their group health plans would choose to drop that coverage and instead only offer fertility coverage through an excepted benefit plan?
• What is the expected take-up rate if premiums were expected to approach the full cost of treatment without coverage?
• Would employers and employees be permitted to pay premiums for excepted benefits with pre-tax dollars?
• What is the value of administrative costs for an excepted fertility benefit plan?
• How would insurance companies go about offering excepted fertility benefits?
• How long may it take insurance companies to offer excepted fertility benefit plans in the group market?

Key unknowns for employers include cost of coverage, insurer rollout, tax treatment and employee uptake. “Our expectation is that most plan sponsors will want to sit tight for the time being. Given the wide scope of comments requested by the agencies in the proposed rulemaking, it is possible that the final regulations may differ significantly from the proposal, making it impractical for employers to take steps based on the proposal,” Proskauer wrote.

Comments on the proposed rule are due July 13, 2026. From there, the departments will begin working on final rulemaking.

More to Come on Affordability?

In the proposed rule, the departments acknowledge that the potentially high costs of IVF and other fertility-related services may limit the share of premiums that employers would be willing to cover if they choose to offer an excepted fertility benefits plan.

The proposal appears intended to expand fertility coverage among employers already inclined to consider it. “These efforts would be even more impactful if the rules included ways for employers to receive premium assistance or discounts that help them provide this coverage,” said Jenny Goins, chief of staff at the National Alliance of Healthcare Purchaser Coalitions, according to MedPage Today.

It’s unclear whether federal agencies will take more action on Executive Order 14216, which calls for aggressively reducing IVF treatment costs.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.