We are considering offering fertility benefits. Are there any special compliance considerations?

Employers are increasingly choosing to offer fertility benefits to employees. However, it is important to ensure that such a benefit offering is properly structured.

To the extent the fertility benefits program provides medical care, it would generally be considered a group health plan and thus subject to the ACA, ERISA, COBRA and other laws. “Medical care” for this purpose is broadly defined to include amounts paid for “the diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body.”

Under the ACA, group health plans are subject to specific requirements (e.g., coverage of preventive services without cost-sharing). ERISA imposes fiduciary obligations, claims review procedures, plan document and Form 5500 filing requirements. COBRA requires continuation of medical coverage for a minimum of eighteen months following certain losses of eligibility.

A stand-alone program typically cannot satisfy these group health plan requirements independently. Accordingly, perhaps the simplest way to offer fertility benefits is to amend/expand the coverage provided directly under the group major medical plan, which is already satisfying ACA, ERISA, COBRA and other requirements. This approach would be coordinated with the insurer or stop-loss carrier.

Alternatively, the fertility benefits could be offered through an integrated HRA, made available to only those employees enrolled in the employer’s major medical plan (or confirmed to be enrolled in another group medical plan, such as a spouse’s, although this adds administrative complexities). The employer could determine the types of fertility expenses and dollar amounts of the HRA reimbursements.

Generally, to be eligible for tax-free HRA reimbursement, the expense must be for medical care (as defined by Code §213(d)) for the employee or their spouse or dependent (but not a surrogate). Infertility expenses eligible for tax-free HRA reimbursement may include procedures such as IVF (including temporary storage of eggs or sperm) to overcome an inability to have children. However, expenses related to the long-term storage (typically greater than one year) of eggs and sperm would not qualify. Furthermore, medical expenses must be for services incurred during the coverage period and not just prepayment for such services.

Please see IRS Publication 502 , “Fertility Enhancement.”

If the employer offers an HSA-qualified HDHP, the fertility HRA would need to be designed as a post-deductible HRA to preserve the employees’ HSA eligibility. The HRA could not pay any benefits until the HDHP annual statutory minimum deductible ($1,400 self-only/$2,800 family in 2022) was satisfied.

The HRA would need to satisfy applicable compliance requirements. As a self-funded plan, these obligations would include, but not be limited to, Section 105 nondiscrimination testing and the PCORI fee filing and Form 720 reporting (although simplified reporting may apply).

Additionally, the employer should recognize that a fertility benefit vendor typically receives protected health information from covered entities (e.g., healthcare providers and/or the health plan) that are directly subject to regulation under the HIPAA Privacy Rule. So, a business associate agreement should be in place between the vendor and the covered entity.

Finally, given all the compliance considerations, it is always advisable for an employer to review the fertility benefits offering, structure and any related contracts with their counsel to ensure all legal requirements are satisfied.