By: HUB’s EB Compliance Team

Until now, fully insured medical insurance plans issued in California were not required to cover in vitro fertilization (IVF) services. With the enactment of California SB 729, all large-group fully insured health insurance plans offered to residents of California must cover IVF services starting with plans renewing on or after July 1, 2025 (i.e., January 1, 2026, for calendar year plans).

Mandatory Coverage of Infertility Treatment for CA residents in Large Group Medical Plans; Optional for Small Plans

On September 29, 2024, the Governor of California signed Senate Bill 729 into law. This bill requires large group medical plans (defined in California as plans sponsored by employers with at least 100 employees in the previous calendar year) offered to California residents to cover IVF services, in addition to the diagnosis and treatment of infertility and fertility services. Large group health plans must cover IVF services, including a maximum of three complete oocyte (egg) retrieval, an unlimited number of embryonic transfers, and infertility medications. Furthermore, plans may not differentiate as to cost-sharing (i.e., co-pays/co-insurance), waiting period(s), benefit maximums, or deductibles, nor can plans impose additional limitations on IVF services or infertility medications that do not apply to other medical services.

By contrast, small group medical plans in California (those with fewer than 100 employees in the prior calendar year) are required to offer their policyholders (i.e., employers) the option to purchase a rider covering the infertility services under the same terms as large group coverage.

Medical plans administered by CalPERS (the California Public Employees’ Retirement System) will not be required to comply with this new mandate until July 1, 2027.

Self-insured (including level-funded) plans sponsored by non-governmental employers, Medi-Cal, Medicare, and VA/TRICARE plans are exempt from the law.

How Is Infertility Defined?

Under the state Health and Safety Code, “Infertility” is defined as:

  • A licensed physician’s findings, based on a patient’s medical, sexual, and reproductive history, age, physical findings, diagnostic testing, or any combination of those factors.
  • A person’s inability to reproduce either as an individual or with their partner without medical intervention.
  • The failure to establish a pregnancy or to carry a pregnancy to live birth after regular, unprotected sexual intercourse for no more than 12 months for a person under 35 years of age or no more than 6 months of unprotected sexual intercourse for a person 35 years of age or older.

Additional Considerations

This law appears to be extraterritorial as written, as it requires any insured large group health plan that covers California residents, regardless of the actual state of the plan’s situs, to cover infertility and fertility treatment. It is unclear how the state of California will enforce this mandate, as most other states in the U.S. define “large group” as plans sponsored by employers with 50 or more employees.

Lastly, the actual text of the law requires plans to comply beginning with plan years renewing on or after July 1, 2025. However, Governor Newsom has requested the California State Legislature to delay the law’s effective date, to plan years beginning on or after January 1, 2026. This mandate will not extend to self-insured or level funded out-of-state plans, as such plans are regulated by ERISA, which preempts enforcement of California coverage mandates.

Takeaways

Employers sponsoring large group insured medical plans in California, and large employers with insured out-of-state medical plans covering California residents should anticipate rate increases to account for coverage of infertility treatment. Employers are still awaiting cost projections from insurance carriers on what the impact to rates will be, as each IVF treatment can cost up to $40,000 per cycle. Employers that sponsor small-group insured medical plans and have California participants should consider whether the increased employee-relations benefit from offering infertility treatment will justify the ensuing premium increase.

Employers should also keep an eye on whether the California state legislature does acquiesce to the Governor’s request to delay the effective date of the law to plan years renewing on or after January 1, 2026.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.