Setting Up a HRA to Cover Infertility Treatment

There are many things to consider when setting up a HRA.

Question: What are the issues to consider for an employer that would like to offer infertility benefits?

Compliance Team Answer:

High-Level Summary

In order to satisfy the ACA issues described below, any infertility benefit should be available only to either:

  1. Employees enrolled in the company’s major medical plan; or

  2. Employees enrolled in the company’s major medical plan or verified to be enrolled in another employer-sponsored group health plan—not an individual policy—meeting certain ACA standards.

The second option is more complex and administratively burdensome, but it would permit the benefit to be available for employees who decline enrollment in the company’s major medical plan. We should discuss the issues with the second option if it’s something you consider pursuing.

There are also HSA eligibility issues to address (discussed below).


We have seen this issue come up a lot recently as more employers start to offer these additional types of medical benefits (e.g., $20,000/yr benefit for infertility services). Prior to ACA, this was ok to be offered as an additional stand-alone benefit. These companies have now had to move to either a) the integrated HRA approach described below, or b) add the coverage as a rider or go self-funded and add the benefits to their major medical plans.

Here is some context:

Infertility Expenses are a §213(d) Medical Expense

  • Infertility expenses are considered a medical expense for tax purposes. This means that any employer reimbursement of an infertility expense is a group health plan subject to the full array of federal laws governing a standard major medical plan (ERISA, HIPAA, COBRA, IRC, ACA, etc.).

ACA: Integrated HRA Requirements

  • In general, the only way to structure a separate infertility reimbursement program is to make it a health reimbursement arrangement (HRA) that is integrated with the company’s major medical plan. The reason is that a stand-alone HRA reimbursing only infertility expenses would violate a number of ACA requirements (e.g., lifetime/annual limits, preventive services), and result in a potential penalty of $100/day/employee.

  • In order to be an integrated HRA, the program would have either have to be a) limited to only employees actually enrolled in the company’s major medical plan, or b) verified to be enrolled in another employer-sponsored group health plan—not an individual policy—meeting certain ACA standards.

Other Legal Requirements for GHPs

  • An HRA is also subject to numerous compliance and administrative obligations, including ERISA plan document and SPD, COBRA, Section 105(h) nondiscrimination testing, COBRA election rights, HIPAA privacy and security controls, and claim substantiation requirements. HRAs are rarely administered in-house for this reason. Most of the TPA vendors will offer HRA administrative services for these types of specialty HRAs.

Eligible Expenses

  • An HRA of this type will generally be structured to cover only infertility-related expenses not covered by the major medical plan.  The exact types of infertility expenses covered are within the company’s discretion.  We can provide examples of other companies if that would be helpful.

  • The HRA also will generally have some form of an annual and/or lifetime limit to limit the company’s exposure.  This is again completely within the company’s discretion—provided the HRA does not cover any benefits that are considered essential benefits under the ACA.

HSA Eligibility Issue: Post-Deductible HRA

  • For anyone in enrolled In an HDHP, the infertility HRA would need to be designed to be post-deductible to preserve the employee’s HSA eligibility. This means that the HRA could not pay any benefits until the employee has reached the statutory minimum deductible ($1,300 self-only/$2,600 family in 2017) in expenses covered by the HDHP.

  • To clarify that last point, the plan’s excluded infertility expenses could not count toward the deductible. The statutory HDHP deductible must first be satisfied through other medical expenses that are covered by the HDHP.

  • The purpose of structuring the infertility HRA in this manner as a “post-deductible HRA” would to ensure that employees covered by an HDHP remain eligible to make or receive HSA contributions. Allowing the HRA to reimburse infertility expenses before the employee satisfied the statutory minimum HDHP deductible would cause employees to lose HSA eligibility.

Alternative/Supplement #1: Including in Major Medical Plan

  • The main way to avoid these issues is to instead offer infertility benefits as a component of the company’s major medical plan. Most insurance carriers offer IVF and other infertility-related riders for an additional cost that may be available. Employers with a self-insured plan have far more control of the infertility benefits, although this still needs to be coordinated with the plan’s stop-loss provider.

Alternative/Supplement #2: Surrogacy/Adoption

  • In some cases, the employer will choose to offer a surrogacy and/or adoption expense reimbursement program instead of or in addition to infertility. Surrogacy and adoption expenses are not considered medical expenses, and therefore they do not raise any of the issues described above. Furthermore, because they are not medical expenses, they are not available as coverage under the medical plan. These can also be important benefits both for couples with fertility issues and same-sex couples.

  • There are no tax-advantaged methods to provide surrogacy assistance.  Adoption assistance can generally be provided tax-free up to $13,570 in 2017 pursuant to a §137 adoption assistance program.

Brian Gilmore
The Author
Brian Gilmore

Lead Benefits Counsel, VP, Newfront

Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.

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