The Departments of Labor, Treasury, and Health and Human Services (Departments) issued a proposed rule that could significantly reshape how employers offer fertility benefits. The proposal would give employers another pathway to offer fertility benefits without embedding those benefits directly in the employer’s major medical plan.

The proposal reflects growing employer interest in fertility benefits and attempts to provide a clearer regulatory framework for offering those benefits outside traditional major medical coverage. Fertility services—ranging from diagnostic testing to treatments such as in vitro fertilization (IVF)—are often costly and inconsistently covered. Many employer-sponsored health plans still provide limited fertility coverage, and employers seeking to offer fertility benefits outside their major medical plans often face complex compliance considerations.

The proposed rule allows employers to offer fertility benefits as a standalone option that qualifies as a new category of limited excepted benefit, similar in concept to standalone dental and vision coverage. This designation is significant because excepted benefits are generally exempt from many federal market reforms that apply to group health plans, including certain requirements under the Affordable Care Act and HIPAA. As a result, employers could design fertility benefit programs with greater flexibility, potentially reducing administrative burdens and expanding employee access.

To qualify as an excepted fertility benefit, the proposal would require:

• substantially all benefits be for the diagnosis, mitigation, or treatment of infertility or infertility-related reproductive health conditions;
• a lifetime maximum benefit of $120,000 per participant (indexed);
• coverage to be offered separately from, or otherwise not be an integral part of, the employer’s primary group health plan;
• the employer making other non-excepted group health coverage available; and
• a written notice describing the benefit and its limitations.

By creating a new excepted benefit category, the Departments aim to encourage employers to expand fertility coverage without requiring them to incorporate these benefits into comprehensive medical plans. In many respects, the proposal attempts to provide a clearer compliance framework for benefit designs that some employers are already using today.

For employers, the proposal presents both opportunities and strategic considerations. On one hand, offering fertility benefits outside the traditional health plan framework may reduce compliance complexity and enable more tailored benefit design. It may also help employers respond to increasing employee interest in fertility-related benefits. On the other hand, employers will need to evaluate plan design, administration, vendor relationships, and employee communications, while also considering utilization patterns and program costs.

From an employee perspective, the proposal could expand access to fertility services and reduce out-of-pocket costs, particularly for individuals who currently lack meaningful coverage. The rule is also designed to allow employees to enroll in fertility benefits even if they decline other employer-sponsored coverage, which could be especially relevant for individuals covered under a spouse’s plan.

Questions employers might consider when looking to implement this new benefit:

• What fertility-related benefits do we currently offer?
• Which employees are not served by our current approach?
• Would a standalone structure provide needed flexibility and/or improve administration?
• How would the benefit interact with state law requirements and with existing vendors?
• How would a standalone fertility benefit affect our existing compliance obligations and reporting processes?

Importantly, the rule remains in the proposal stage, and the Departments are soliciting comments on key design elements, including the lifetime dollar cap, scope of covered services, and notice requirements. If finalized, the rule would generally apply to plan years beginning on or after January 1, 2027.

Members of the Jackson Lewis Employee Benefits and Executive Compensation Practice Group can help if you have questions or need assistance. Please contact a Jackson Lewis employee benefits and executive compensation team member or the Jackson Lewis attorney with whom you regularly work.  Subscribe to the Benefits Law Advisor Blog.