Federal Agencies Propose New “Excepted Benefits” Category for Fertility Coverage

An Opportunity Across the Industry: Key Insights for Employers, Fertility Clinics, and Healthcare Investors 

On May 10, 2026, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) jointly proposed a rule that would create a new category of “excepted fertility benefits” under federal law (the “Proposed Rule”). The Proposed Rule represents the most significant federal regulatory action on fertility benefits in years and carries direct implications for employers, fertility service providers, and healthcare investors.

Background

The Proposed Rule responds to Executive Order 14216, “Expanding Access to In Vitro Fertilization,” in which President Trump directed federal agencies to identify ways to make IVF treatment more affordable and accessible. Currently, employers seeking to offer fertility coverage outside their major medical plans face complex compliance requirements under ERISA, the ACA, HIPAA, and the tax code. The Proposed Rule, if finalized, would create a streamlined regulatory pathway by classifying fertility benefits as “limited excepted benefits,” a category that includes dental, vision, and health FSA coverage, thereby exempting them from many federal market reforms.

Key Provisions

Under the Proposed Rule, a standalone fertility benefit must satisfy four conditions to qualify as an excepted benefit:

• Scope. Substantially all covered services must relate to diagnosing, mitigating, or treating infertility or related reproductive health conditions, and must be delivered by licensed medical professionals. Covered services may include IVF, intrauterine insemination, fertility medications, diagnostic services, counseling, and surgical procedures.
• Lifetime Cap. Benefits are capped at a combined lifetime maximum of $120,000 per participant (including beneficiaries), indexed for medical inflation after 2027. Though, the Departments are seeking comment on whether an annual limit should be applied in lieu of a lifetime cap.
• Separation from Major Medical. The fertility benefit must be provided under a separate supplemental policy. The employer must still offer access to a traditional group health plan, though employees need not enroll in it to receive the fertility benefit.
• Notice. The plan must provide clear written notice describing the coverage, its limitations, how to access in-network providers, and how to submit claims.

Implications for Fertility Clinics and Providers

If finalized, the rule is expected to significantly increase employer-sponsored demand for fertility services. By lowering compliance barriers, the Proposed Rule encourages more employers, particularly mid-market and smaller employers that have not historically offered fertility coverage, to enter the market. The Departments estimate that nearly a million participants are likely to enroll in the excepted fertility benefits. Fertility clinics, ART providers, and specialty benefit administrators should anticipate increased patient volume and new contracting opportunities with employers and third-party benefit managers.

Implications for Healthcare Investors

The McKinsey Health Institute estimates that women’s health represents a $1 trillion annual opportunity for the global economy by 2040. The fertility and reproductive health industry has already seen significant growth with high margin elective procedures and associated services, such as egg freezing and genetic testing. Surveys show that approximately 40% of large employers already offer fertility benefits. However, the Proposed Rule, along with state fertility benefit mandates, expands the addressable market for employer-sponsored fertility benefits and creates new opportunities in benefit administration, network development, and bundled or value-based fertility arrangements. If finalized, investors will continue to see robust market demand. 

Comment Period and Next Steps

Comments on the Proposed Rule must be submitted through regulations.gov by July 13, 2026. If finalized as drafted, the Proposed Rule would take effect for plan years beginning on or after January 1, 2027. Stakeholders, including employers, fertility platforms, and investors should evaluate how the proposed framework may affect benefit design, vendor relationships, and long-term strategy.