The decision to offer fertility benefits has become a critical strategic move for employers looking to attract and retain top talent. However, navigating the cost and compliance of these benefits requires a sophisticated understanding of both federal health law and clinical best practices. It’s not simply about if you offer the benefit, but how you structure it to protect both employee health and your bottom line.
The Regulatory Path: Using "Excepted Benefits" to Offer Coverage
The core challenge for employers lies with the Affordable Care Act (ACA), which generally prohibits annual or lifetime dollar limits on covered essential health benefits within a major medical plan. Since comprehensive fertility treatment is expensive and requires cycles or dollar caps to be financially sustainable for a plan, employers need a workaround.
The solution comes from offering the benefits as an "excepted benefit," a regulatory classification that exempts the coverage from key ACA mandates. Recent federal guidance clarifies two primary pathways for employers:
- The Standalone Fertility Policy: The most robust option for comprehensive coverage is to offer a fully insured, separate insurance policy that covers a specified illness (like infertility). Because this policy is separate and non-coordinated with the main health plan, it qualifies as an "independent, non-coordinated excepted benefit." This structure is critical because it allows the plan to specify clear, manageable limits, such as covering a certain number of IVF cycles or a lifetime dollar maximum (e.g., $50,000). Crucially, this mechanism enables employers to offer a benefit that would otherwise be cost-prohibitive under a standard major medical plan.
- The Excepted Benefit Health Reimbursement Arrangement (EB HRA): This account-based arrangement allows an employer to reimburse an employee for out-of-pocket fertility costs. As a "limited excepted benefit," the EB HRA is a valuable supplemental tool, but it is restricted by an annual reimbursement cap (e.g., $2,200 for 2026, adjusted for inflation). While helpful for covering smaller costs like diagnostics or medication copays, the EB HRA is generally not sufficient to cover the full expense of a single IVF cycle.
By leveraging these excepted benefit frameworks, employers gain the flexibility to offer valuable fertility coverage without exposing their main health plan to unlimited liability.
IVF: The Critical Role of Embryo Transfer
Fertility benefits overwhelmingly center around In Vitro Fertilization (IVF), a multi-stage process where fertilization occurs outside the body. After ovarian stimulation and egg retrieval, the eggs are fertilized with sperm to create embryos. The final, pivotal step is the Embryo Transfer (ET), where the selected embryo(s) are carefully placed into the woman's uterus.
Transfers can use fresh embryos from the current cycle or Frozen Embryo Transfers (FETs), with FETs often being favored in modern practice due to the ability to genetically test embryos and optimize the uterine environment.
The Elephant in the Room: The Cost of Multiples
While the cost of an IVF cycle itself is significant (often $15,000 to $25,000), the largest financial risk to an employer's overall health plan stems directly from a potential complication: multiple gestations (twins, triplets) resulting from the transfer of more than one embryo.
A single, uncomplicated birth costs an average of roughly $21,000 in the first year. However, that cost explodes to approximately $105,000 for twins and over $400,000 for triplets due to the high risk of prematurity and extended stays in the Neonatal Intensive Care Unit (NICU). This staggering, unpredictable expense lands squarely on the employer’s main health plan.
This risk is historically driven by plan design. When employees are given low-dollar caps, they feel immense pressure to transfer multiple embryos (MET) in a single attempt to maximize their odds before the money runs out.
The Smart Solution: Mandating Single Embryo Transfer (eSET)
Leading-edge fertility benefits address this risk head-on by promoting the safest clinical practice: Elective Single Embryo Transfer (eSET).
The most effective strategy is to utilize the Standalone Policy to offer cycle-based benefits (e.g., covering 2-4 full IVF cycles) rather than low-dollar limits. This structure eliminates the financial incentive for risky behavior, allowing the patient and physician to prioritize eSET. By removing the financial pressure, employers ensure that clinical decisions are based on safety and medical probability, not cost.
In essence, a well-designed fertility benefit acts as a cost-control measure. By investing wisely in comprehensive coverage that encourages eSET, employers dramatically reduce their exposure to high-risk, six-figure claims associated with multiple births, leading to healthier outcomes for employees and a more financially responsible benefit strategy overall.
