ALERT / MAY 20, 2026

Proposed rules would expand employer options for fertility benefits

7 MIN READ

Federal agencies have issued proposed rules (opens a new window) that could create a new, more flexible pathway for employers to offer fertility benefits, including coverage for in vitro fertilization (IVF), outside of traditional group health plan structures.

The proposal would allow employers to offer fertility benefits as a limited “excepted benefit,” enabling the benefit to operate separately from the major medical plan, similar to dental or vision coverage, without running afoul of certain laws like the Affordable Care Act (ACA) and HIPAA.

The proposed rule follows a 2025 Executive Order under the Trump administration that emphasized the importance of expanding access to family‑forming services and making fertility treatment more affordable, pushing federal regulatory agencies to create rules to enhance access to fertility benefits.

Executive Summary

Federal agencies released a proposed rule that provides a framework for employers to offer fertility benefits as a HIPAA excepted benefit, allowing broader access to coverage through mechanisms such as a self-funded health reimbursement arrangement.
The new pathway contains several requirements, including a lifetime maximum of $120,000 (indexed), and a notice obligation, along with other requirements related to the benefit offering structure.
If finalized as written, the rule would become effective for plan years beginning on or after Jan. 1, 2027.
Federal agencies will take public comments until July 13, 2026.

Current rules

Presently, employers that wish to offer fertility benefits outside of the major medical plan to a broad portion of their employee population face significant compliance challenges under the current legal framework, making it very difficult to offer this type of stand-alone benefit.

Why? Any employer-sponsored medical benefit is generally treated as a group health plan, subject to various applicable laws, including ERISA, COBRA, the ACA and HIPAA requirements. Compliance with the ACA, specifically with mandates like preventive care coverage, external review, and restrictions on annual and lifetime limits, has made stand-alone fertility benefits virtually impossible as, by design, they typically cannot comply with these ACA requirements. To avoid these issues, employers often must limit eligibility for these stand-alone fertility programs to those employees enrolled in the major medical plan, undermining the goal of offering broader access. However, if the benefit could be deemed an “excepted benefit” under the HIPAA rules, the benefit would be exempt from certain ACA compliance identified above, meaning the employer could offer it to a broader employee base, e.g., beyond only those employees enrolled under the employer’s major medical plan.

In 2025, the Employee Benefits Security Administration of the U.S. Department of Labor (EBSA) released an FAQ highlighting existing pathways employers could potentially leverage to provide fertility benefits as an “excepted benefit.” However, those “excepted benefit” pathways, and the requirements to qualify, provide limited options for these fertility benefit programs. Our prior Alert (opens a new window) in October highlighted the challenges employers face trying to design a program that falls under any of the current allowed categories for excepted benefit status.

So, practically speaking, employers at this time have limited options to provide fertility coverage, particularly on a self-insured basis, to employees not enrolled in the employer’s major medical plan.

The new path for “excepted benefit” status for fertility benefits

Enter this new proposed rule. It creates a new pathway for fertility benefits to be deemed excepted benefits, opening the opportunity for employers wishing to offer a fertility benefit option to any employee who is also offered major medical coverage by the employer (regardless of enrollment in the latter), without triggering potential compliance issues in the process.

LOCKTON COMMENT: The ability to provide these benefits on an “excepted benefit” status allows the benefit to avoid compliance with the ACA and HIPAA rules. However, the benefit program would still be a group health plan and subject to ERISA and COBRA. Additionally, should the rules be finalized “as is,” employers offering a high-deductible health plan in conjunction with a health savings account (HSA) would still need to ensure the benefit is set up appropriately and in accordance with the Tax Code requirements so as not to disqualify individuals from being HSA eligible.

To qualify as an “excepted benefit,” fertility coverage would need to meet several requirements:

Benefits must primarily cover services related to the diagnosis and treatment of infertility and be provided by licensed medical professionals.
The benefit coverage would be capped at a $120,000 lifetime limit per participant (subject to future medical inflation adjustments).
The benefit must be offered separately from the plan sponsor’s major medical coverage. Specifically, the fertility benefit must be provided:
- Under a separate policy, certificate or contract of insurance, or
- Structured (even on a self-funded basis) so it is not an integral part of employer plan sponsor’s major medical plan. Specifically:
  - The same plan sponsor must still offer a major medical plan (that is not limited to excepted benefits and is not a health reimbursement arrangement (HRA) or other account-based plan) to the employees offered the fertility benefit; and
  - Employees enrolling in the fertility benefit may decline coverage for the other group health plan coverage.

LOCKTON COMMENT: If the rule is finalized, it provides the framework that some employers are looking for to offer broader access to fertility benefits for employees who are also offered coverage under the employer’s major medical plan, through self-funded mechanisms like an HRA, regardless of enrollment under the employer’s major medical plan and without certain compliance issues

There is a notice obligation, as is the case with most benefit-related rules. The notice would need to be provided by the first day the employee is eligible to enroll; on an annual basis; and upon request. Plans would be required to provide a clear, easy-to-understand notice, describing:
- The covered services provided under the benefit, including any applicable limitations;
- Information as to how to access providers; and
- The process for submitting claims.

LOCKTON COMMENT: Offering “excepted benefit” fertility coverage is optional for most employer group health plans. Particularly for self-funded plans, the proposed rule would allow employer plan sponsors to provide fertility coverage under their major medical plan or to exclude it under the major medical plan and offer the coverage on a standalone basis instead. However, for some fully insured plans, certain states have insurance laws requiring IVF coverage under the fully insured plan (and an even larger number of states with insurance laws providing at least some kind of fertility coverage).

If finalized, the proposed rule would be effective for plan years beginning on or after Jan. 1, 2027.

LOCKTON COMMENT: Many employers with calendar year plans will start finalizing benefit offerings and plan design in the next several months to prepare for 2027 open enrollment. There is no guarantee as to when the proposed rule would be finalized, or what changes might be made under the final rule. It might be difficult for employers to structure a program for the Jan. 1, 2027 plan year based on that uncertainty.

Comment period

The Departments are seeking comments through July 13, 2026. Should employers or other stakeholders in the benefits space wish to provide thoughts or concerns, they should consider providing feedback to the Departments. Those comments could result in changes and/or revisions when the final rule is released.

Lockton will monitor the progress and will provide more information if and when the final rule is released.