Departments Release Proposed Rules on Fertility Benefits

In May of 2026, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) released proposed rules known as “Excepted Fertility Benefits” addressing the ways in which fertility benefits could qualify as an “excepted benefit” in accordance with previous regulations and FAQs released by the Departments. These proposed rules were provided as a follow-up to previously released FAQs by the Departments titled “FAQs about Affordable Care Act Implementation Part 72” (FAQ Part 72) describing multiple methods by which fertility benefits could be offered as an excepted benefit (e.g., as an independent, noncoordinated benefit or limited excepted benefit) and the February 18, 2025 Executive Order 14216, recommending policy protections related to fertility treatment and services, including in vitro fertilization (IVF). Although fertility benefits may be offered under a major medical plan, many employer-sponsored group health plans do not include fertility benefits as a part of their major medical plans. As a result, employers/plan sponsors 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

• A stand-alone benefit program offered by a third-party vendor.

In the past, it was unclear whether fertility benefits offered under such stand-alone programs were compliant under federal regulations. However, as discussed in the Brown & Brown Regulatory and Legislative Strategy team’s previously published article here, the above referenced FAQ Part 72 provided different avenues for an employer to provide fertility benefits as an excepted benefit, either as a category of an independent, noncoordinated excepted benefit or a limited excepted benefit (among other categories). The FAQs stated that future proposed rules would be released at a later date, and these recently released proposed rules further clarify how fertility benefits may be offered as a limited excepted benefit. If finalized, these rules would be effective for plan years beginning on or after January 1, 2027 and will likely be welcome news for many employer plan sponsors hoping to expand access to fertility benefits while reducing the cost of these services for their employees.

Background

Under current regulations issued by the Departments, excepted benefits (e.g., stand-alone dental/vision coverage, fixed indemnity plans, Medicare supplemental plans) are not subject to many of the regulations that govern their non-excepted benefit counterparts (e.g., medical coverage, minimum value coverage, minimum essential coverage). For instance, excepted benefits are not subject to certain ACA requirements, including:

• The prohibition on applying lifetime/annual dollar maximums to essential health benefits (EHBs) offered under a medical plan, 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).

The Departments previously issued regulations and guidance in connection with how certain benefit coverages may be considered excepted benefits. For a benefit plan to qualify as an excepted benefit, it must be specifically prescribed for under the federal rules. The four primary categories of excepted benefits include:

1. Non-health related benefits (e.g., automobile insurance, workers’ compensation coverage, or accident/disability income insurance)

2. Limited excepted benefits (e.g., standalone dental and vision coverage)

3. Independent, noncoordinated excepted benefits (e.g., fixed/hospital indemnity plans and specified disease/illness plans)

4. Supplemental excepted benefit plans (e.g., Medicare supplemental plans)

Proposed Rules on Fertility Benefits Qualifying as a Limited Excepted Benefit

The Departments propose incorporating fertility benefits as an excepted benefit under the “limited excepted benefits” category. If the fertility benefits qualify as a limited excepted benefit under the new rules (once finalized), employers will have greater flexibility to offer these benefits outside of the major medical plan and without the limitations of the above-mentioned requirements under the ACA (e.g., no lifetime/annual maximum). This will allow employers to provide more robust fertility coverage to their employees and assist employees in family planning by reducing the financial burden of these services.

The Departments propose that fertility benefits can qualify as a limited excepted benefit (i.e., be an excepted fertility benefit) if they meet the following requirements.

Fertility Benefits Defined

For fertility benefits to qualify as an excepted benefit, the benefit may only offer “…benefits[,] substantially all of which are for the diagnosis, mitigation, or treatment of infertility or infertility-related reproductive health conditions and substantially all of which are provided by medical professionals authorized to practice under applicable law.¹” This would include preventive care services, non-preventive care services, treatment for underlying conditions that may impact fertility/infertility (e.g., obesity, nutritional deficiencies), and initial treatments for infertility or infertility-related reproductive health conditions, regardless of the gender/sex of the individual. Although these benefits must not be an integral part of the group health plan’s major medical coverage (further defined, below) to remain an excepted benefit, nothing in these rules would prohibit an excepted fertility benefit from having overlapping coverage with a major medical plan under the plan sponsor’s plan, or a coordination-of-benefits provision within a plan sponsor’s plan documents. The proposed rules specifically note that abortion or abortion-related services would not be considered a fertility-related service.

Excepted Fertility Benefits Must Include a Lifetime Dollar Limit

The Departments propose that a total lifetime dollar limit would apply to excepted fertility benefits. This proposed lifetime dollar limit would not exceed $120,000 in benefits. This would apply to excepted fertility benefit plans with plan years beginning on or after January 1, 2027 (if these rules are finalized), and would adjust annually based upon inflation. This would mean that after a plan or policy provides $120,000 in coverage, no additional benefits/coverage could be provided by the plan (or issuer). However, in future years, additional benefits could be provided in the amount of the annual inflationary amount increase. For example, if an employee incurs up to $120,000 of expenses related to fertility benefits in 2027 under the plan, and the inflationary adjustment to the benefits are $5,000 in 2028 (for a total of $125,000 of lifetime coverage in 2028), this employee could seek up to another $5,000 of reimbursements for fertility services in 2028 (e.g., new lifetime limit becomes in 2028 $125,000 - $120,000 previous lifetime limit = $5,000 of additional reimbursable amount from plan in the current year).

Excepted Fertility Benefits Cannot be an Integral Part of the Plan

Excepted fertility benefits cannot be an “integral part” of the health plan. This would mean that the fertility benefits plan must:

• be provided under a separate certificate, policy, or contract of insurance; or

• otherwise not be an integral part of the plan

This would mean that, similar to the excepted benefit health FSA rules, the plan sponsor can only offer the fertility benefits to those employees that are also offered a non-excepted benefits plan (e.g., major medical coverage that is not an HRA). This would apply to both self-funded and fully insured fertility benefits coverage. There is no requirement that these employees actually enroll in the non-excepted benefit (e.g., major medical plan), meaning they may decline the major medical plan and still enroll in the fertility benefits coverage.

The Departments considered, but did not adopt at this time, a requirement that the benefits must be entirely paid for by the employer. Therefore, unless the final rules provide something different, employers may require employees to contribute towards fertility benefits coverage without jeopardizing its status as an excepted benefit.

Required Notice to Eligible Plan Participants of Excepted Fertility Benefits Coverage

The Departments propose that insurance issuers and plan sponsors be required to deliver a notice to any plan participant or beneficiary who is eligible to enroll in the excepted fertility benefits coverage, no later than the first date on which the participant is eligible to enroll, annually thereafter, and upon request. The notice is intended to notify individuals of the availability and scope of such coverage, and the proposed rules contain additional guidance on the required content of the notice. The notice would need to be sent to the last known address of the plan participant. However, if a beneficiary’s (e.g., spouse) last known address is different than the plan participant’s last known address, then delivery to the beneficiary’s last known address is also required. Electronic delivery to the last known electronic address of a plan participant or beneficiary is acceptable, if such delivery adheres to the relevant disclosure requirements that would be applicable to the plan. However, ERISA covered plans should adhere to ERISA’s electronic distribution requirements if the notice is to be delivered electronically.

Other Considerations for Employer Group Health Plan Sponsors Adopting Stand-Alone Fertility Benefit Programs

Employers/plan sponsors looking to adopt fertility benefits for their employees outside of their major medical plans may find this proposed guidance as welcome news. However, employers should carefully review the final regulations (once available) and the various compliance considerations discussed above when implementing a stand-alone fertility benefit outside of major medical coverage to ensure it qualifies as an excepted fertility benefit. Further, although this new proposed guidance confirms that fertility benefits may be offered as an excepted benefit, these benefits are still subject to many other group health plan rules, including ERISA² (e.g., plan document and SPD requirements, etc.) and COBRA³. Lastly, employers offering a health savings account (HSA) to employees should also be aware that fertility benefits that provide first-dollar coverage prior to an individual satisfying their IRS minimum deductible could interfere with an individual’s HSA eligibility, unless the fertility benefit services provide only preventive care. Brown & Brown’s Regulatory and Legislative Strategy team will continue to monitor this topic and notify teammates and customers when the Departments release the final rules or any other updates.

For additional information on excepted fertility benefits, the proposed rules are accessible, here.

For more information, contact your Brown & Brown representative or connect with us here.

[1] See preamble to Proposed Rules on Excepted Fertility Benefits

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

[3] The Consolidated Omnibus Budget Reconciliation Act.