Fertility benefits and compliance: What every employer should know

Navigating applicable rules and regulations can be one of the most complicated and stressful parts of offering a new employee benefit. But, as an employer, staying compliant is necessary to protecting both your company and your people. 

Fertility benefits may seem especially daunting from a compliance perspective, given that rules and regulations rarely keep pace with the benefits demands of today’s modern workforce. Even with this added complexity, the right fertility benefits vendor can guide companies through the applicable rules and regulations and provide a solution that meets the company’s specific compliance needs. Here are three important compliance considerations to keep in mind and tips for selecting the right vendor to guide you through them. 

Taxes & Fertility Benefits

What you should know

As a general matter, the Internal Revenue Service (IRS) recognizes medical expenses as excludable from federal income when covered for employees through an employer-sponsored benefit plan. As for whether or not fertility expenses qualify as medical expenses under IRS rules, the IRS has only said affirmatively that fertility-related medical expenses necessary “to overcome an inability to have children” qualify.  

However, given the growing interest in fertility benefits, there’s increasing demand to cover fertility care that’s not related to an inability to have children. For example, a single woman not interested in conceiving today — despite her ability to — may be interested in egg freezing. A single man may be similarly interested in sperm analysis or sperm freezing. Although elective fertility services not tied to a formal medical diagnosis are increasingly common, the IRS still has yet to issue definitive guidance regarding their proper tax treatment.

How your vendor can help

At Carrot, we believe a vendor’s top priority is to serve the customer. Every company is different, and the best vendors understand that there is no one-size-fits-all approach to taxation. We’ll work with you to understand your preferences for tax treatment and can support your specific needs with industry-leading flexibility.


What you should know

Nearly all employer-sponsored group health plans that cover or reimburse medical expenses are subject to disclosure, reporting, and other requirements under ERISA, also known as the Employee Retirement Income Security Act of 1974. Although these requirements can be cumbersome to the employer, they are designed to protect the interests of employee participants and beneficiaries. 

How your vendor can help

Given that ERISA regulates group health plans, it’s important to know whether or not your vendor can support your company’s decision to offer fertility benefits as a group health plan. To minimize your administrative burden, ask your vendor if they can provide a plan document that meets ERISA’s requirements for group health plans. 


What you should know

HIPAA, or the Health Insurance Portability and Accountability Act, is a federal law that, among other things, requires covered entities and their business associates to ensure the confidentiality and security of protected health information (PHI). Given the sensitive personal information that fertility benefits vendors are entrusted with, it’s important to feel comfortable with your vendor’s security systems and data privacy practices.

How your vendor can help

All fertility benefits vendors are likely to receive PHI from covered entities that are directly subject to HIPAA regulations. If your vendor is HIPAA-compliant, they will be willing to sign a business associate agreement (BAA). A BAA commits the vendor to appropriate safeguards that prevent use or disclosure of PHI outside the scope of the service agreement. Ask for one as part of your diligence process. At Carrot, we take the handling of your employees’ health information very seriously; we offer enterprise-level security and privacy safeguards and sign BAAs with our customers.

While compliance issues can be a lot to manage, a good fertility benefits vendor will make the process as seamless as possible while keeping you and your employees protected. Bring these topics to your conversations with potential vendors, and you’ll be informed to make the best choice for your workforce. 

Ready to learn more about Carrot? Get in touch today.

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