FAQs Released Related to Fertility Benefits

Fertility Benefits Coverage Background

Generally, fertility benefits offered under traditional employer-sponsored group health plans (i.e., major medical coverage) are allowed (and considered compliant) under existing regulations set forth by the Departments. However, some plans do not cover fertility benefits, or some employers may find that the fertility benefits offered through their major medical carrier are too restrictive or lack adequate participant navigation^[2]. As a result, employer plan sponsors might seek to provide coverage of these benefits through other means, including:

• Health reimbursement arrangements (HRAs) that are integrated with Affordable Care Act (ACA)-compliant medical coverage, or
• Coverage of fertility benefits offered by third-party vendors through a stand-alone benefit program.

Historically, the widely held presumption has been that fertility benefits offered under an HRA or a stand-alone program constitute a "group health plan" and would not comply with the ACA’s mandates on annual dollar limits or preventive care coverage.

As a result, these FAQs provide helpful clarity with respect to how fertility benefits can remain compliant under existing regulations by qualifying as an excepted benefit. Employer group health plan sponsors interested in expanding access to fertility benefits and reducing costs for their employees may view this new guidance as a welcome development. For cost reference purposes, fertility benefit costs can range from $12,000 to $25,000 per cycle, and fertility drugs can comprise almost 20% of the total cost of a fertility treatment cycle.^[3]

Excepted Benefit Background

Under current HIPAA^[4] regulations issued by the Departments, excepted benefits (e.g., stand-alone dental/vision coverage, fixed indemnity plans, Medicare supplemental plans) are not subject to some of the federal regulations that govern their non-excepted benefit group health plan counterparts. For instance, excepted benefits are not subject to certain Affordable Care Act (ACA) requirements, including:

• The prohibition on applying lifetime/annual dollar maximums to essential health benefits (EHBs), and
• The requirement for plans to provide preventive care to plan participants without any cost sharing (i.e., preventive care must be paid 100% by the plan).

For a benefit plan to qualify as an excepted benefit, it must fall into one of four sub-categories, as outlined below:

• Non-health related benefits (e.g., automobile insurance, workers’ compensation coverage, or accident/disability income insurance)
• Limited excepted benefits (e.g., standalone dental/vision coverage)
• Independent, non-coordinated excepted benefits (e.g., fixed/hospital indemnity plans and specified disease/illness plans)
• Supplemental excepted benefit plans (e.g., Medicare supplemental plans)

Recent Fertility Benefits FAQs

These FAQs confirm that properly structured fertility benefits offered by employer plan sponsors can qualify as an excepted benefit under either of these two sub-categories, detailed below:

1. Independent, non-coordinated excepted benefits; and
2. Limited excepted benefits.

Fertility Benefits as Independent, Non-coordinated Excepted Benefits

For fertility benefits to be considered an independent, non-coordinated excepted benefit under these FAQs, the benefits must satisfy all three of the following requirements:

• The benefits are provided for under a “separate policy certificate or contract of insurance,” meaning it must be a fully insured plan;
• There is no coordination of benefits between the fertility benefits and the exclusion of such benefits from the other plans maintained by the same employer plan sponsor; and
• The fertility benefits must be paid by the fertility benefits insurer regardless of whether such benefits are also provided by the group health plan maintained by the same employer plan sponsor.

Note that employees are not required to be enrolled in a traditional group health plan in order for the stand-alone fertility benefits to be considered an excepted benefit under the sub-category of an independent, non-coordinated excepted benefit.

Critically, the FAQs confirm that fertility benefits cannot be provided on a stand-alone self-funded basis and still be considered an excepted benefit under the sub-category of an independent, non-coordinated excepted benefit. Nonetheless, the Departments do highlight in these FAQs that they intend in future rules to expand the list of excepted benefit subcategories to include stand-alone self-funded fertility benefits.^[5]

The FAQs also include a footnote clarifying that hospital indemnity or other fixed indemnity insurance paying a fixed dollar amount per period of hospitalization or illness related to infertility (for example, $100/day), regardless of the amount of expenses incurred, may also qualify as an independent, non-coordinated excepted benefit, provided it satisfies the applicable requirements for independent, non-coordinated excepted benefits that are detailed above here.

Fertility Benefits as Limited Excepted Benefits

The FAQs also describe situations where fertility benefits can qualify as an excepted benefit under the category of limited excepted benefits. These methods may include payment for/reimbursement of fertility benefits through an excepted benefit HRA or an Employee Assistance Program (EAP), provided it meets the requirements set forth under the excepted benefits sub-category of limited excepted benefits, as detailed below:

Excepted Benefit HRA (EBHRA): Another pathway for employees to be reimbursed for fertility benefit-related expenses is through an excepted benefit HRA (EBHRA), as long as the EBHRA satisfies all of the following requirements:

• It is not an integral part of the employer group health plan, and the EBHRA is only offered to employees who are eligible for the employer-sponsored traditional group health coverage.
• The reimbursements for fertility benefits (or any other qualified expenses that an EBHRA may reimburse) are limited to a certain annual inflationary-adjusted amount ($2,200 for 2026).
• The EB HRA cannot reimburse certain health insurance premiums^[6] but can reimburse premiums for excepted benefit plans.
• The EB HRA must be provided to all "similarly situated individuals," regardless of any "health factor."^[7]

Employee Assistance Program (EAP): Specific fertility benefits limited to counseling or coaching/navigating services can be provided under an Employee Assistance Program (EAP) that is considered an excepted benefit. Generally, for an EAP to be considered an excepted benefit, it cannot provide any "significant" benefits for medical care (along with other requirements set forth under the regulations).

The FAQs underscore that "an EAP will not be considered to provide benefits that are significant in the nature of medical care solely because it offers benefits for coaching and navigator services to help individuals understand their fertility options."

An EAP offering fertility benefits that does not provide "significant" medical care would qualify as an excepted benefit (under the sub-category of a limited excepted benefit) if all of the following conditions apply to the EAP:

• It must not be coordinated with other benefits under the employer plan sponsor’s group health plan;
• Participants cannot be required to contribute towards the EAP as a condition for participation; and
• Participants cannot have any cost-sharing related to services received under the EAP.

Excepted Benefits & HSA Eligibility

The Internal Revenue Service (IRS) allows individuals to contribute to a Health Savings Account (HSA) and receive "first-dollar coverage," or prior to satisfying their high-deductible health plan (HDHP) deductible, as long as such coverage is solely provided as an independent, non-coordinated excepted benefit^[8]. This means that if an employer offers fertility benefits through an independent, non-coordinated excepted benefit, those payments/reimbursements will not jeopardize an employee’s HSA eligibility. As a result, an employee may continue to contribute to an HSA even if they are receiving first-dollar coverage for fertility benefits under an independent, non-coordinated excepted benefit.

The same HSA eligibility rationale may apply for purposes of other excepted benefits, but these FAQs only address independent, non-coordinated excepted benefits, so a closer benefit-specific review may be necessary. Employers are advised to consult with their legal counsel to determine whether other fertility-related excepted benefits would impact HSA eligibility.

Employer Group Health Plan Sponsor Considerations

These new FAQs, while not necessarily breaking new ground, are a welcome and helpful development for employer plan sponsors interested in implementing fertility benefits for their employees, without those benefits being subject to certain restrictions generally applicable to traditional group health plan coverage.

Still, employer plan sponsors are advised to proceed cautiously when implementing fertility benefits under either an independent, non-coordinated excepted benefit or a limited excepted benefit. While these new FAQs do clarify and confirm that fertility benefits can be offered as an excepted benefit under certain conditions, they may still be subject to other group health plan rules, including ERISA,^[9] HIPAA, and COBRA^[10]. Moreover, employers implementing an insurance policy covering fertility benefits should be aware that excepted benefits are not subject to ACA restrictions on pre-existing condition exclusions or annual dollar limits. So, employers should carefully consider whether the policy will offer meaningful fertility-related benefits in line with their intent and goals.

On a final note around the broader landscape in connection with expanding access to fertility treatments and reducing costs, these FAQs were released on the same day as an announcement by the White House to add a commonly used fertility medication to TrumpRx.gov, a federally operated website where individuals will be able to buy prescription medications at discounted prices.

Risk Strategies is committed to keeping employers informed and up-to-date. Reach out to your Risk Strategies account team with any questions, or contact us directly here.

[1] Generally, FAQs released by the Departments serve as sub-regulatory guidance from the Departments that answer questions from interested stakeholders to help them better understand the law and promote compliance.

[2] According to a White House Fact Sheet released the same day as these FAQs, 42% of employers offer coverage of fertility services, 32% offer coverage of fertility medications, 32% offer coverage of IVF, and 19% offer coverage of non-IVF treatments.

[3] See White House Fact Sheet referenced in the footnote directly above.

[4] The Health Insurance Portability and Accountability Act of 1996.

[5] The Departments also confirm in these FAQs that they are considering whether to modify the standards under which supplemental health insurance coverage provided by a group health plan, including a fertility coverage supplemental benefit, will be considered to satisfy the conditions for being an excepted benefit.

[6] Including individual health insurance coverage, group health plan coverage (other than COBRA continuation coverage or other continuation coverage), or Medicare Part A, B, C, or D.

[7] As defined under 26 CFR § 54.9802-1(d) and 26 CFR § 54.9802-1(a), respectively.

[8] https://www.irs.gov/pub/irs-pdf/p969.pdf

[9] The Employee Retirement Income Security Act of 1974.

[10] The Consolidated Omnibus Budget Reconciliation Act.