The California Corner: SB 729 –Coverage for Infertility and Fertility Medical Services

On September 29, 2024, California’s Governor Gavin Newsom signed SB 729 into law, modifying requirements related to coverage of infertility and the provisions of related benefits in employer-sponsored, fully insured group health plans having a situs in California.  The new law will be effective for groups renewing their health plans on or after July 1, 2025.

As of October 2024, there are 13 states that also mandate coverage of fertility services, with some states covering in vitro fertilization (“IVF”) services (note: these mandates only apply to fully insured employer sponsored health plans having a situs in the particular underlying state). The infertility coverage mandates, in most of the 13 states, define infertility similarly to the old California Health and Safety Code HSC § 1374.55 (last updated January 2023) definition

“Infertility means…the presence of a demonstrated condition recognized by a licensed physician and surgeon as a cause of infertility, or (2) the inability to conceive a pregnancy or to carry a pregnancy to a live birth after a year or more of regular sexual relations without contraception.”

This definition presumed that only male-female sexual relationships could be classified as “infertile”. California’s new infertility mandate, SB 729, changes the male-female axiom to include same sex and non-binary couples and is a landmark change on how infertility medical services are covered.

Employer Action Items

• Employers and plan sponsors with California sitused and fully insured health plans should review newly covered services with their consultants and carriers to determine projected rate impacts.
• If required, employers and plan sponsors that meet California’s definition of a “Religious Employer” will want to verify with counsel any exemption availability regarding these required services.
• Impacted employers and plan sponsors should update their plan documents, if needed, and become familiar with the law in anticipation of employee questions.

Summary

The new definition of infertility, for the purposes of this California mandate is:

• “Infertility” means a condition or status characterized by any of the following:
  • A licensed physician’s findings, based on a patient’s medical, sexual, and reproductive history, age, physical findings, diagnostic testing, or any combination of those factors. This definition shall not prevent testing and diagnosis of infertility before the 12-month or 6-month period to establish infertility as defined in the third bullet point immediately below.
  • A person’s inability to reproduce either as an individual or with their partner without medical intervention.
  • The failure to establish a pregnancy or to carry a pregnancy to live birth after regular, unprotected sexual intercourse. For purposes of this section, “regular, unprotected sexual intercourse” means no more than 12 months of unprotected sexual intercourse for a person under 35 years of age or no more than 6 months of unprotected sexual intercourse for a person 35 years of age or older. Pregnancy resulting in miscarriage does not restart the 12-month or 6-month time period to qualify as having infertility.

Following, pleased find an inventory of who is covered, what is covered, and how they are covered:

• Covered groups are small group plans (with 1 to 100 eligible employees) and large group plans (over 100 eligible employees).  The law is silent as to coverage for individual plans, and the law does not apply to Medi-Cal participants.
• Coverage commences for groups renewing on or after July 1, 2025. Coverage is required in large group and small group disability insurance policies and is also effective for groups renewing on or after July 1, 2025.
• Infertility is diagnosed as a condition characterized by licensed physicians through medical, sexual, reproductive history, age, and/or diagnostic testing processes.
• Infertility is defined as “a person’s inability to reproduce either as an individual or with their partner without medical intervention.”
• Plans are required to cover three (3) cycles of IVF, as well as any underlying services, diagnostics, and related procedures.
• Religious employers (as defined in Section 1367.25) are exempt from the mandate.
• Plans are prohibited from having “…any exclusion or denial of coverage of any fertility services based on a covered individual’s participation in fertility services provided by or to a third party…third party includes an oocyte, sperm, or embryo donor, gestational carrier, or surrogate that enables an intended recipient to become a parent”.

Coverage of medical services for third parties (such as egg and sperm donors and surrogates) is not detailed in the mandate, and covering third parties creates unique legal issues. The coverage of fertility services for a third party may give rise to legal and regulatory issues under ERISA, HIPAA, and the like. Currently, third parties are not subject to the exclusions, limitations, eligibility and enrollment rules of the health plan covering the services at federal law. Most carriers will have to make changes to their eligibility and claim systems to pay claims for a third party that is not a dependent. Additionally, third parties may not satisfy the definition of a “dependent” for purposes of ERISA, Section 125, and HIPAA; thus, it is unclear how treatments and services provided to third parties will be adjudicated. 

Fully insured and self-insured plan sponsors with plans having a situs in California, or any other state with a fertility coverage mandate, should stay tuned to the Baldwin Bulletin for more information about this quickly evolving topic.

Additional Resources

• https://legiscan.com/CA/text/SB729/id/2708340#:~:text=Bill%20Text 
• https://calmatters.org/health/2024/09/ivf-health-insurance-coverage-law