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The U.S. Departments of Labor, Health and Human Services, and Treasury recently issued a joint proposed rule that would create a new category of limited excepted benefits under the Affordable Care Act (ACA) for fertility treatment. The rule would allow insurance plans to offer separate fertility benefits coverage exempt from most ACA market reforms, essential health benefits requirements, and certain other federal law provisions. In these respects, fertility treatment coverage would be a distinct category, much like dental and vision coverage.
The proposed rule stems from an executive order designed to expand access to fertility treatment benefits. The stated goal of the executive order and related initiatives is to address declining birth rates in the U.S. and bolster family/population growth.
Benefits coverage qualifies as limited excepted benefits if it meets the following four conditions:
- Scope of benefits, in that substantially all the benefits must relate to the infertility or reproductive health conditions provided by licensed medical professionals;
- Lifetime dollar limit of $120,000 per participant and eligible beneficiaries, as indexed for medical inflation;
- Separation from primary coverage under the group health plan; and
- Clear written notice to participants outlining fertility coverage as an excepted benefit.
Most traditional group health plans offer no fertility treatment or IVF coverage due to their high costs and complex regulations. Only some large employers offer fertility coverage, while most offer none. The proposed rule would create flexibility to offer some degree of benefits without running afoul of ACA prohibitions or being required to integrate coverage into a primary medical plan. However, some argue that the proposed rule may prompt certain employers that currently offer coverage to shift it to excepted benefits, reducing coverage for their workers.
Furthermore, fertility treatment coverage would still be subject to specific federal laws, such as ERISA’s fiduciary duties and the Americans with Disabilities Act. Plans also must keep careful records of treatment for every plan participant to avoid running afoul of the lifetime cap. Self-funded plans may face other issues with establishing this type of coverage as an excepted benefit.
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