By: HUB’s EB Compliance Team

As a component of the 2025-26 California State budget, Governor Newsom recently signed into law AB 116, which delays compliance with the new California in vitro fertilization (IVF) coverage mandate. With the enactment of AB 116, large, fully insured medical plans that renew between July 1, 2025 and December 1, 2025, will now be required to comply with the new infertility coverage mandate when their plans renew in 2026. Large, insured medical plans renewing January 1 through June 1 will be required to comply with the new mandate as of their plan renewal in 2026. Employers in the small group market will not have to consider offering an infertility rider that mirrors coverage in the large group market, until their plan’s renewal on or after January 1, 2026.

While the service and coverage elements of the law itself have not materially changed, there are several important practical considerations and options for covered employers to consider:

  • Stay the Course. Plans that renew prior to January 1, 2026 (July 1, 2025-December 1, 2025), whose insurance rates already include the cost of the new infertility benefit, and who have already issued Summaries of Benefits and Coverage (SBCs) and/or Evidence of Coverage booklets to covered participants announcing that infertility treatment is covered as of their plan’s renewal in 2025, can choose to keep the coverage in place. Some insurance carriers may require employers to affirm that they want to cover infertility in 2025 rather than 2026, therefore notice may need to be sent to the carrier informing them of this decision. Employers in the small group market who considered purchasing an infertility rider in 2025 should consult their medical insurance carrier to confirm if the rider is still available, or if they will have to wait until 2026 to cover infertility benefits.
  • Delay compliance until the 2026 plan renewal. Employers may also request that their medical carrier remove the new IVF coverage from their plans.  Employers sponsoring plans renewing between July 1, 2025 and December 1, 2025, must make the request prior to the plan’s renewal date to avoid issuing a Summary of Material Reduction. The Affordable Care Act (ACA) requires employers to provide at least 60 days’ advance notice and a Summary of Material Reduction to participants informing them of reductions in coverage adopted after the plan’s renewal date. If Summaries of Benefits and Coverage (SBCs) that include coverage for IVF were already distributed to covered participants, revised SBCs must be distributed to account for the removal of this coverage. Removing IVF coverage from medical plans may also cause employee relations issues. Therefore, employers should notify employees of this change as soon as possible.

Plans that are set to renew prior to January 1, 2026, and have already issued Summaries of Benefits and Coverage (SBCs) that do NOT include coverage of IVF, do not have to take any action. Some medical insurance carriers chose not to include coverage of IVF in their SBCs, as they were anticipating a delay in the effective date of the mandate for renewing plans from July 1, 2025 - December 1, 2025. However, for employee relations purposes, it may be beneficial to inform employees of the delay in the law’s effective date, specifically that coverage for these IVF services will take effect at next year’s renewal.

If insurance carriers included a surcharge in their 2025 renewal rates (plans renewing 7/1/25-12/1/25) to account for the new IVF coverage mandate, employers may have to request that the carrier reissue rates for 2025. As employee contributions are based on premium rates, employers will have to determine whether they will share the reduction in premiums with employees or maintain the same employee contributions. If employers choose to share the reduction in premiums with employees, they will have to update their systems to reflect the reduction in employee contributions. Depending on the significance of the decrease in employee contributions, employers may also be required to allow employees to change their benefit elections under Cafeteria Plan rules. Lastly, employers will be required to notify their COBRA TPA of a change in carrier rates, as COBRA qualified beneficiaries would be required to pay lower premiums based on the elimination of IVF coverage from plans.

If carriers delayed increasing premium rates to account for the IVF mandate, no action is required on the employer’s part. However, subject employers should be prepared for larger-than-usual rate increases in 2026 due to the inclusion of IVF coverage.

Important reminder: Out-of-state plans that cover even one California resident are required to comply with this law. Therefore, out-of-state employers, especially large employers that employ California residents, may wish to consider purchasing a rider for their plans.

Takeaways

  • Subject employers (i.e., those that sponsor large group health plans with California participants, regardless of the employer’s headquarters or plan situs) should be prepared for premium increases beginning in 2026, which are expected to be between 1% and 2% to account for the new coverage requirements.
  • Employers sponsoring small group plans with California participants should consider whether the increased employee relations benefit from offering IVF coverage outweighs the resulting premium increase.

As a reminder, this law does not impact self-funded, level-funded, Medi-Cal, Medicare, or VA/TRICARE plans.

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.