Fertility coverage unlocked: What SB 729 means for California employers

In September 2024, California enacted an insurance mandate (SB 729) that requires certain health insurers to cover fertility treatment, including IVF. This law changes California’s Health & Safety Code and its Insurance Code, and it will take effect for policies that are amended, issued, or renewed on or after July 1, 2025.

California SB 729 expands access to fertility care in the state, affecting both employers and employees. As the law takes effect, employers must prepare to meet the new requirements and consider the implications for their health benefits offerings. Understanding the nuances of this mandate will be essential for compliance and providing access to benefits for employees facing infertility challenges.

What’s covered? 

SB 729 requires coverage for specific infertility services, including: 

• Diagnosis and treatment of infertility 
• In Vitro Fertilization (IVF)
• Up to three completed egg retrieval procedures
• Unlimited embryo transfers

Who does this apply to?

SB 729 applies to all fully insured small and large group major medical insurance policies, as well as self-funded, non-ERISA medical plans located in California. It also appears to extend to out-of-state policies issued to California residents. Still, it is unclear how California can enforce this mandate against an insurer without a significant business presence in the state.

The requirements for large and small group plans differ. Large group plans are required to provide coverage for the specified services. In contrast, small group plans must offer participants the option to purchase this coverage as an additional benefit, such as through an optional rider. 

SB 729 does not apply to self-insured ERISA plans, including level-funded plans.

Impact on self-funded employers

In response to this mandate, insurance carriers are expected to raise fully insured premium rates by 1% to 2%. However, as an employer with a self-funded ERISA medical plan, you can decide whether to implement similar changes. When evaluating the decision to align with SB 729, it is important to consider several key factors, including, but not limited to, the following: 

Employer considerations

I. Market competitiveness and talent attraction

• Benchmarking information
• Currently, 47% of health plans in California cover IVF services according to the Mercer 2024 National Survey of Employer-Sponsored Health Plans; this figure is likely to increase significantly in the state following the benefit mandate rollout. 
• Nationally, only 28% of health plans cover IVF services according to the Mercer 2024 National Survey of Employer-Sponsored Health Plans.

II. Cost and financial impact

• Actuarial analysis: MMA’s data shows that the annual IVF cost in 2024 is $15,000 to $25,000 nationally, but the price will vary depending on group geography, demographics, and other factors.
• Cost control strategies: It seems that the benefit plan design for the IVF benefits must align with the other features of the plan. We recommend consulting with your legal counsel on this matter.
• Premium impact vs. cash flow: The anticipated cost impact to health plans is 1% to 2% of the medical plan budget, but this could vary depending on the geographical location, demographics, and the stakeholders' plan design features. The CA SB 729 bill says that the cost-sharing for IVF benefits must be similar to the other attributes of the plan to ensure parity.

III. Employee health and well-being

• Enhanced infertility coverage can significantly boost morale. Research shows that when employees feel supported by their employer regarding health benefits, it can increase job satisfaction and morale. Conducting research and internal surveys can help measure this impact.
• Consider the long-term impact on workforce health and retention. Even if voluntary, comprehensive benefits can lead to a healthier, more loyal workforce, potentially reducing turnover and the cost associated with replacements.

IV. Additional considerations

There are several additional considerations and short-term, mid-term, and long-term implications the market will need to address following the rollout of the benefit mandate:

• How will access to fertility provider services, costs, and utilization be affected over time?
  
• Will there be significant pent-up demand for utilization once the benefit mandate begins?
  
• How will non-fertility-related medical and Rx service costs and utilization be impacted over time, given the anticipated increased fertility service-related utilization? (For example, will medical inpatient costs for maternity hospitalizations increase?)

Employers must recognize that the situation surrounding CA SB 729 is dynamic and continually evolving. As we navigate these changes, MMA remains committed to providing information and updates that affect this benefit area. We will continue to offer insights to help you make informed decisions amid shifting market conditions.