Federal Agencies Add New Employer Flexibility for Fertility Benefits

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On October 16, 2025, the Department of Labor, the Department of Health and Human Services, and the Department of Treasury (the “Departments”) published a new set of Frequently Asked Questions (“FAQs”) titled “FAQs about Affordable Care Act Implementation Part 72.” The FAQs do not impose entirely new regulatory obligations; instead, the Departments offer important clarifications with respect to fertility-related benefits and the status of such benefits as “excepted benefits” separate from a traditional group health plan while remaining compliant. The article below provides an overview of the key points of the FAQs along with the implications for employers and plan sponsors.

Background

By way of background, certain types of health coverage are referred to as “excepted benefits” that are not considered “group health plans” under the Affordable Care Act (“ACA”) subject to specific requirements. The FAQs emphasize four categories of excepted benefits:

• Benefits that are not health coverage due to the nature of such benefits (e., auto insurance, worker’s compensation, etc.);

• “Limited-scope” benefits, such as dental or vision coverage and benefits for long-term care offered separately as well as various account-based arrangements;

• Independent, non-coordinated excepted benefits, including stand-alone disease or illness coverage, hospital indemnity, and the like; and

• Supplemental excepted benefits, meaning coverage supplementing Medicare or Tricare.

In sum, if an employer offers benefits that are carved out of the group health coverage, certain benefits that meet the ACA requirements might qualify as “excepted,” thereby avoiding some of the ACA compliance burdens. If structured properly, an excepted benefit is exempt from most ACA mandates, including prohibitions on annual or lifetime limits, certain health benefit requirements, and several market-reform provisions.

Key Takeaways

As fertility and family-planning benefit requests grow, employers feel the need to consider offering fertility benefits, and meaningful guidance is rather timely. The FAQs recently issued by the Departments specifically address fertility benefits and clarify that an employer may offer fertility benefits as an independent, non-coordinated excepted benefit if certain conditions are satisfied. For instance, if a policy covers infertility and does not coordinate benefits with the group health plan, the infertility benefits can qualify as a “specified disease or illness policy” if provided as insured benefits. For the avoidance of doubt, the Departments made it clear that a self-funded employer plan cannot self-insure this benefit and treat fertility benefits as an independent, non-coordinated excepted benefit without triggering the ACA’s full suite of mandates.

The Departments also signal their intent to propose further rules to expand limited excepted benefit design options to potentially include infertility health reimbursement arrangements (“HRAs”) under certain conditions. Notably, if an account-based benefit arrangement, such as an HRA, reimburses out-of-pocket expenses for fertility benefits (and meets other requirements, as detailed below), the arrangement could qualify as an excepted benefit HRA so long as: (1) the HRA is otherwise not an integral part of the plan; (2) benefits are limited in amount; (3) there is a prohibition on reimbursement of certain health insurance premiums; and (4) the HRA is made available under the same terms to all similarly situated individuals.

Employer Impact

Infertility benefits have become increasingly popular among employers, and the FAQs provide employers with the ability to structure those benefits as an excepted benefit without implicating certain group health plan requirements under the ACA. The FAQs offer an opportunity for employers to review their benefits to take advantage of the excepted-benefit rules and communicate that the fertility benefits to employees are separate and apart from group health coverage. Among other advantages due to the availability of the excepted benefit status to employers, an infertility benefit program can be designed with its own eligibility criteria and cost-sharing independent of the main health plan coverage, which can help manage cost and risk and avoid duplicative coordination with the group health plan. The clarification offered by the FAQs is of utmost importance and good news for employees who may require fertility accommodations, including those who identify as LGBTQ+, as employers now have more clear pathways to include access to such benefits without the complexities of group health plan coverage.

For employers considering leveraging the FAQs to their benefit, the first step would be to review infertility benefits and plan design to determine whether the current structure is in compliance with the guidelines set forth in the FAQs. If any gaps are identified, plan sponsors should promptly bring the fertility benefits into compliance. For example, employers ought to assess their current employee communications and related documents to ensure that the separate nature of infertility benefits is accurately reflected therein to avoid inadvertent coordination with the group health plan.

For those seeking to offer such benefits for the first time, advantages and disadvantages of avenues to provide infertility coverage should be considered. Among other things, employers should consider the funding status of infertility benefits – as noted above, to qualify as an excepted benefit, the coverage: (1) cannot be self-funded; and (2) must be offered under a separate policy, with no coordination with the group health plan exclusions or coverage. Employers must also determine whether a group contract or an account-based arrangement to reimburse out-of-pocket costs benefit adequately serves the needs of their employees.

Conclusion

All in all, if an employer desires to offer fertility-treatment support to its employees, the FAQs offer guidance as to the ways to do so outside of group health plan coverage under the excepted-benefit framework to avoid the stricter ACA guidelines. The clarifications in the FAQs are rather helpful for employees needing assistance with family planning and employers wanting to find new ways to reach their inclusivity goals by providing targeted benefits to the workforce. As the Departments “are committed to exploring ways to leverage their existing authority to protect IVF access, reduce costs for IVF, and encourage the adoption of a full range of fertility benefits by employers,” additional guidance that may further broaden flexibility around fertility benefits is likely forthcoming, and employers should remain vigilant of any upcoming changes.