What Employers Should Know About “Excepted Fertility Benefits”

In response to Executive Order 14216 and last November’s ACA FAQs, the Departments of Labor, Health and Human Services, and Treasury have issued a proposed rule that would formally recognize certain fertility benefits as “limited excepted benefits.”  

If finalized, this rule would introduce a new, optional pathway for employers to offer fertility coverage outside of their core medical plan, significantly expanding flexibility in benefit design and delivery. 

For plan sponsors, the proposed rules warrant compliance attention but may also be used as a strategic opportunity to enhance total rewards programs. 

What are Excepted Benefits? 

Excepted benefits are types of coverage that are exempt from many compliance requirements applicable to group health plans under ERISA, the Internal Revenue Code, and Public Health Services Act. This makes them a flexible, cost-effective benefit offering for employers looking to enhance their benefits package without additional regulatory complexity. Excepted benefits fall into four categories. 

The Four Categories of Excepted Benefits: 

Coverage that is Not Health Coverage: Always Excepted 

This category includes coverage like auto, liability, workers’ compensation, and disability income insurance. These benefits always qualify as excepted regardless of their structure. 

Limited Excepted Benefit 

Limited excepted benefits includes standalone dental and vision plans, long-term care, certain health reimbursement arrangements (HRAs), health flexible spending arrangements (FSAs), and employee assistance programs (EAPs). Employers must provide these benefits under a separate policy, certificate, or contract of insurance, or are otherwise not an integral part of the group health plan. 

Independent, Noncoordinated Excepted Benefits 

This category covers policies like cancer-only or hospital indemnity insurance. In other words, the coverage does not coordinate with group health plans. 

Supplemental Excepted Benefits 

Employers can offer these benefits if they provide them under a separate policy, certificate, or insurance contract. Examples include Medigap, Tricare/CHAMPVA supplements, or similar supplemental coverage that supplements coverage under a group health plan. These plans are designed to fill gaps in primary coverage. 

What the Proposed Rule Would Do 

The proposed rule builds on prior agency guidance creating a new category of limited excepted benefits specifically for fertility services.  

At a high level, it would allow employers to: 

• Offer stand-alone fertility benefits, similar to dental or vision coverage 
• Cover services related to the diagnosis, mitigation, or treatment of infertility 
• Provide access to fertility coverage without requiring enrollment in the employer’s major medical plan 

Importantly, offering this coverage would remain voluntary. However, the rule is intended to make it easier for employers that choose to do so. 

Key Design Parameters 

While the rule provides flexibility, it also establishes certain guardrails for plan design: 

Scope of Coverage 

Benefits must be primarily tied to infertility and related reproductive health services, which may include: 

• IVF and other assisted reproductive technologies 
• Diagnostic testing and medications 
• Surgical or corrective treatments 
• Lifetime Maximum 

Plans would be subject to a lifetime dollar cap of $120,000 per participant, indexed for inflation beginning in 2028.  

Participant Disclosures 

Employers (and insurers) would be required to provide clear notices describing coverage, limits, and claims procedures, reinforcing transparency for employees. 

How Excepted Fertility Benefits Differ

Prior to this proposal, employers could offer fertility-related support through existing excepted benefit pathways, such as: 

• Specified disease policies (insured only) 
• Excepted benefit HRAs (subject to strict dollar limits) 
• EAPs offering navigation or support services 

Traditionally, these options have been limited in scope and administratively complex, limiting widespread adoption. 

The proposed rule represents a meaningful evolution by introducing a more direct, scalable framework tailored specifically to fertility benefits. 

Practical Considerations for Employers 

While the rule is not yet final, employers may want to begin evaluating how this approach could fit into their broader benefits strategy. 

Strategic Opportunities 

• Expand family-building support in response to employee demand 
• Enhance competitiveness in attracting and retaining talent 
• Offer targeted coverage without redesigning core medical plans 

Plan Design Questions 

• What level of financial support (e.g., up to the cap) is appropriate? 
• How will this integrate with existing fertility vendors or programs? 
• Should the benefit be offered broadly or targeted to specific populations? 

Compliance and Administration 

• Monitor final rulemaking and effective dates 
• Ensure plan documentation aligns with excepted benefit requirements 
• Evaluate interactions with HSAs and other tax-advantaged accounts 

What Employers Should Consider Next 

The rule is currently in the proposal stage, with agencies soliciting public comments before issuing final regulations. 

Timing and final details may evolve, so employers should continue to monitor developments closely. 

The proposed Excepted Fertility Benefits rule signals a notable shift in how fertility coverage can be delivered through employer-sponsored benefits. By creating a clearer and more flexible pathway, the rule has the potential to reduce the compliance burden while expanding access to high-cost, high-impact services. 

For employers, this is an opportunity to rethink how fertility and family-building benefits fit within an overall total rewards strategy. By planning early, employers can also be prepared to act once final regulations are issued. 

Connect with a OneDigital Benefits Compliance Expert to evaluate how evolving fertility benefit regulations may impact your plan strategy, compliance obligations, and workforce goals.