Governor Newsom has signed into law SB 729, which will increase access to in vitro fertilization (IVF) and other infertility/fertility services. The new California law applies to fully insured health policies issued, amended, or renewed on or after July 1, 2025. Among the mandates, the headline is that large group plans (100+) must cover up to three cycles of oocyte (egg) retrievals for IVF purposes.

Newfront Point of View from Executive Vice President Paul Martinez

With the passage of California Senate Bill 729, it will be interesting to see how this new mandate impacts employers' family-forming strategies. Historically, employers have relied on point solutions like Carrot, Maven, and Progyny to help alleviate the financial burden of infertility and fertility treatments for their employees. These vendors not only administer self-funded family-forming benefits but also offer additional value in terms of support, education, and specialized care.

With SB 729 now requiring health insurers to cover fertility treatments, employers may reassess their relationship with third-party vendors. One of the leading trends among employers is the reduction of duplicative services to achieve cost savings, and this shift in legislation could drive organizations to reconsider whether self-funding family-forming benefits through these vendors remains necessary or if they should solely rely on their mandated health insurance plans to provide coverage.

It will be fascinating to see how employers balance the value added by these point solutions against the desire to streamline benefits and reduce costs in light of this new coverage mandate.

The Current Law (Pre-SB 729)

California law currently does not mandate that health insurance policies cover infertility treatment. Since 1990, the applicable insurance mandate has instead required that insurance carriers offer employers the option to add infertility treatment as a rider to the policy. However, the current mandate specifically excludes IVF from the required offering.

The result is that California law currently imposes no requirement that insurance carriers ever offer employers the ability to supplement the policy with an IVF component. Rather, current law requires only that insurance carriers make available the option—as opposed to mandated coverage—for employers to include infertility treatment—but without any coverage for IVF—as part of the insurance policy.

The New SB 729 Requirements (Effective July 1, 2025)

The new California state insurance mandates related to infertility and fertility services, including IVF, apply for policies issued, amended, or renewed on or after July 1, 2025. For a calendar year plan, these changes will take effect for the 2026 policy year.

The new mandates differ depending on whether the insurance policy is large group or small group. Note that California is one of four states (CA, CO, NY, VT) that has expanded its definition of small employer to up to 100 employees. In short, large group policies are required to cover infertility and fertility services, whereas small group policies are required only to offer employers the option to add such coverage.

Large Group Policies (100+ Employees)

SB 729 mandates that large employer policies cover the diagnosis and treatment of infertility and fertility services. This coverage mandate includes IVF, with a maximum of three completed oocyte (a developing egg) retrievals and unlimited embryo transfers. The policy may not impose any limitations or cost-sharing on such infertility or fertility services that are different from those imposed upon benefits for services not related to infertility.

Small Group Policies (1-100 Employees)

SB 729 mandates that small employer policies offer employers the option to supplement the policy to include the diagnosis and treatment of infertility and fertility services. The small group rules are clear that there is no requirement the policy actually include coverage for such services.

This mandate to offer optional coverage mandate includes IVF, with a maximum of three completed oocyte (a developing egg) retrievals and unlimited embryo transfers. If the employer elects to purchase this additional coverage rider, the policy may not impose any limitations or cost-sharing on such infertility or fertility services that are different from those imposed upon benefits for services not related to infertility.

CalPERS

Implementation of SB 729 is delayed for CalPERS (the benefit system for state employees) until July 1, 2027.

What About Policies Outside of California?

SB 729 includes the following statement: “This section applies to every disability insurance policy that is issued, amended, or renewed to residents of this state regardless of the situs of the contract.” In other words, the law at least purports to have extraterritorial reach to apply for any employee in California regardless of whether the policy is sitused in California. It is not clear if/how California can enforce such a provision. We should expect more guidance form the Department of Insurance as we near the implementation date.

What About Self-Insured (Including Level Funded) Plans?

SB 729 does not apply to self-insured (including level funded) plans.

ERISA expressly preempts state laws that relate to ERISA employee benefit plans. One major exception from the general rule is that ERISA does not preempt any state insurance laws for a fully insured plan (the “Savings Clause”). Employer-sponsored group health plans that are fully insured must therefore comply with state insurance mandates, including SB 729.

However, self-insured plans are not subject to any state insurance mandates because ERISA confirms that self-insured plans cannot be treated as subject to state insurance law (the “Deemer Clause”). Employer-sponsored group health plans that are self-insured (including level funded) therefore are not subject to the mandates imposed by SB 729—even for California employees.

Newfront Note: While self-insured (including level funded) plans are not required to provide the infertility/fertility (including IVF) services set forth in SB 729, employers will likely face multiple forms of competitive pressures to consider adding such infertility benefits to their self-insured plan (or via a specialty HRA) when similar fully insured employers include such benefits beginning in 2025 and 2026.

For more details:

• ERISA Preemption of State Insurance Mandates

• Newfront ERISA for Employers Guide

What About the Cost?

HHS has reported that the average cost for a single IVF cycle are estimated to range from $15,000 to $20,000, and that the average number of cycles needed to become pregnant from IVF is 2.5. This means that the average cost of IVF to conceive successfully can easily exceed $40,000. With respect to California, a recent survey of fertility clinics reported average out-of-pocket costs of $24,000 per IVF cycle, totaling $61,000 per successful outcome.

Needless to say, these costs will have an effect on insurance policy premiums.  For small California employers (up to 100 employees), the employer will have the option of weighing the additional cost and the value of its services in deciding whether to include the coverage in the policy.  Large California fully insured employers (and their employees with respect to the employee-share of the premium) will automatically have to assume the additional cost because such coverage is mandated.  The California Health Benefits Review Program (CHBRP) estimated that in the second year of the mandate, total net annual expenditures for large group plans will increase by $329 million (0.21% increase). 

What’s Next?

California joins a growing list of states to mandate that health insurance policies include infertility and fertility coverage, including IVF. That list is likely to grow as the issue continues to get widespread media and political attention. In the signing statement for SB 729, Governor Newsom made it clear that he wants California to become “a national leader for increasing access to reproductive health care.” He further stated that “I want to be clear that the right to fertility care and IVF is protected in California. In many other states, this is not the case.”

These types of political appeals are likely to become more common in other states that have not adopted a similar mandate as residents struggle with the high costs of infertility and IVF services.

Disclaimer: The intent of this analysis is to provide the recipient with general information regarding the status of, and/or potential concerns related to, the recipient’s current employee benefits issues. This analysis does not necessarily fully address the recipient’s specific issue, and it should not be construed as, nor is it intended to provide, legal advice. Furthermore, this message does not establish an attorney-client relationship. Questions regarding specific issues should be addressed to the person(s) who provide legal advice to the recipient regarding employee benefits issues (e.g., the recipient’s general counsel or an attorney hired by the recipient who specializes in employee benefits law).