By: HUB’s EB Compliance Team

On May 13, 2026, the Departments of the Treasury, Labor and Health and Human Services (the “Departments”) issued a notice of proposed rulemaking that would establish excepted fertility benefits as a new category of limited excepted benefits under the Internal Revenue Code (Code), the Employee Retirement Income Security Act of 1974 (ERISA) and the Public Health Service Act (PHS Act) (the Proposed Rule). Issued pursuant to Executive Order 14216 (Expanding Access to In Vitro Fertilization), the Proposed Rule would, for the first time, allow employers to offer fertility benefits — including in vitro fertilization (IVF) — outside the federal market requirements added by the Health Insurance Portability and Accountability Act (HIPAA), the Affordable Care Act (ACA) and related statutes. However, that offer of fertility benefits is also subject to some conditions.

Regulatory background

Group health plans are generally subject to federal market reform requirements, including those under the ACA. Coverage that qualifies as an excepted benefit is exempt from such requirements. Limited excepted benefits statutorily include limited-scope dental, limited-scope vision and long-term care benefits. The Departments are also authorized to specify, by regulation, other similar limited benefits. The Departments have previously used that authority to recognize health flexible spending arrangements, employee assistance programs (EAPs), limited wraparound coverage and excepted benefit HRAs (EBHRAs). The Proposed Rule newly recognizes fertility benefits as an excepted benefit. If finalized, it will be applicable to plan years beginning on or after January 1, 2027.

The four proposed conditions

Under the Proposed Rule, a fertility benefit will qualify as a limited excepted benefit only if it satisfies all four of the following conditions:

  1. Limited scope. Substantially all of the coverage must be for the diagnosis, mitigation, or treatment of infertility or infertility-related reproductive health conditions, and substantially all of the benefits must be provided by medical professionals authorized to practice under applicable law. Covered services may include diagnostic testing, ovulation induction, intrauterine insemination, IVF and other assisted reproductive technology, surgical treatment of underlying conditions (such as endometriosis, fibroids, or varicoceles), prescription fertility medications and fertility counseling. Abortion and abortion-related services are expressly excluded.
  2. Lifetime dollar limit of $120,000. The total lifetime benefit per participant, together with covered beneficiaries, may not exceed $120,000. For plan years beginning after December 31, 2027, the limit would be indexed for medical inflation.
  3. Not an integral part of the plan. The benefit must be offered under a separate policy, certificate, or contract of insurance, or otherwise not be an integral part of the plan. For self-funded arrangements, the second prong is satisfied if the plan sponsor also offers a non-excepted, non-account-based group health plan to participants eligible for the fertility benefit, and those participants may decline that other coverage.
  4. Written notice to participants. Plans and issuers must provide a written notice about the availability of the benefit no later than the first date a participant or beneficiary is eligible to enroll, annually thereafter, and upon request. The notice must be written in plain language and must describe the coverage, summarize benefits and limitations (including the lifetime dollar limit), and explain network and claims procedures. The notice is in addition to the Summary Plan Description and other ERISA disclosures but may be provided at the same time.

The Departments did not propose prohibiting employee premium contributions or cost sharing, although they are soliciting comments on whether such a prohibition is warranted.

Implications for plan sponsors

  • Plan flexibility. Employers could offer a robust fertility benefit (including IVF up to $120,000 lifetime) without subjecting the arrangement to ACA market reforms such as the prohibition on annual and lifetime dollar limits on essential health benefits (EHB), the maximum out-of-pocket limit, or the preventive services mandate. The usage of coverage that qualifies as an excepted benefit also generally does not, by itself, disqualify an individual from contributing to a Health Savings Account (HSA).
  • ERISA preemption and state insurance laws. For fully insured plans, state insurance mandates continue to apply. The preamble expressly notes that federal excepted-benefit status does not displace state EHB designations, which prohibit annual and lifetime dollar limits on EHB-designated benefits. Insured arrangements in states such as California, Illinois, New York, Massachusetts, Maryland and Rhode Island will still be subject to the underlying mandates at the plan level.
  • Vendor carve-outs and Section 125. Existing specialty-vendor arrangements will likely need to be amended to fit within the $120,000 lifetime cap. They will also likely need to be amended to add the participant notice component. Where employee contributions will be paid on a pre-tax basis, the benefit must also be added to the cafeteria plan document under Code § 125, and nondiscrimination testing implications should be considered.

Practical considerations

It remains to be seen whether employers will move to add this coverage as an excepted benefit under their plans. While it certainly allows employers to be more generous than they were previously allowed to be (i.e., being able to offer fertility coverage to those not enrolled in the employer’s medical plan), this flexibility comes as many employers are focused on managing plan expenses.

Additionally, the medical plans that provide fertility coverage (outside state mandates) often have lifetime limits far lower than the $120,000 lifetime cap that would be present under the Proposed Rule.

Conclusion

The Proposed Rule represents a significant expansion of the limited excepted benefits framework and, if finalized, would offer employers a meaningfully more flexible pathway to provide fertility coverage. Plan sponsors evaluating fertility benefit strategy — particularly those currently administering coverage through specialty vendors or considering adding IVF coverage — should begin assessing the overall fit of this proposed new benefit. In addition, the Proposed Rule is not final. Comment-driven revisions and a possible delay in the applicability date remain possible. The final rule will also, in the end, need to be reconciled against an evolving patchwork of state insurance mandates.

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

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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.