Today's Edition

• 🏩 Why California’s New Fertility Coverage Law Makes PEOs Worth a Second Look

• 🦄 Hustle Fund Fireside Chat with Srini Panguluri & Elizabeth Yin

• 📊 Participate in 2025 Benefits Benchmarking Survey!

🏩 Why California’s New Fertility Coverage Law Makes PEOs Worth a Second Look

California's new fertility coverage mandate has quietly altered the competitive landscape for employers, creating an opportunity for sub-100 employee startups willing to think creatively about their benefits structure. Let's jump into what I mean by that:

What is California SB 729?

California's SB 729 requires all large group health plans issued in California to offer coverage for fertility treatments, including in vitro fertilization (IVF), effective July 1st, 2025.

The mandate covers large-group plans with 100 or more enrolled employees and requires insurers to provide:

• Coverage for fertility diagnosis and treatment

• Coverage for IVF procedures

• Coverage for fertility preservation for medical necessity

• Three completed cycles of IVF with unlimited embryo transfers

For context, the average cost of a single IVF cycle runs between $12,000 to $17,000, with many patients requiring multiple cycles. Until now, only the most well-funded companies offered comprehensive fertility benefits or wellbeing providers (such as Carrot or Progyny), creating a significant disparity in the market. These costs are a major inhibitor for the employee and for the company in utilizing the benefits.

The revised & expanded definition of infertility under the law now includes several criteria which you can read here.

There’s also a possibility of the effective date being pushed to January 1, 2026 to give the state more time to update its benchmark plan, but no official confirmation of this has been released.

The Small vs. Large Group Distinction

Understanding the difference between small and large group health plans is key here, as the distinction is what defines the strategic opportunity for SMBs:

Small Group Plans in CA (under 100 employees):

• Subject to community & age-banded rating rules that limit premium variations

• Often have standardized plan designs with less flexibility & higher out-of-pocket costs

• Limited plan customization due to carrier rules & minimums

• Insurers must offer infertility coverage as optional riders (add-ons at cost)

Large Group Plans in CA (100+ employees):

• Experience & composite-rated based on the specific group's health utilization

• Offer more customization and flexibility in plan design

• Generally provide more robust benefits (lower out of pocket cost to the consumer) at more competitive rates

• Now required to include fertility benefits as stated above (diagnoses & treatment, IVF, etc.)

This regulatory division creates a scenario where smaller companies are actually at a structural disadvantage precisely when they're fighting hardest for talent against well-resourced competitors. So what can they do about this?

Leverage a PEO to Your Advantage

Enter the PEO, an elegant workaround that allows small group companies with less than 100 employees to access large group benefits without adding a single new hire.

A PEO works through co-employment, where your employees become part of the PEO's larger employee pool for certain administrative purposes, most importantly in this case health insurance. By aggregating thousands of employees across different companies, PEOs access large group plans with typically stronger rates and more comprehensive coverage.

This means you can essentially skip the line as a “small group” company to qualify for “large group” benefits. Smaller companies can offer best-in-class programs (complete with fertility coverage as of 7/1/25) that your larger competitors already tout. The new law only amplifies the value a PEO brings to the table.

In addition to these plans, here are some benefits that could be included in a PEO relationship, depending on the partner:

• Large group medical, dental, vision, life, and disability

• Physical, emotional, financial, and specialty wellbeing programs such as

  • Teletherapy solutions and Employee Assistance Program

  • Employee Advocacy & Telehealth

  • Discounts marketplace & programs

  • Women’s health programs

  • Fraud prevention

  • Legal services & more

• Learning Management Systems

• Multiple Employer Plan Retirement Options

If you have a healthcare renewal on 7/1 or want to move to a PEO with fertility coverage after 7/1, now’s the time to pick up the conversation. Remember, your PEO must have its master policy written out of California for the mandate to apply.

Having worked in the PEO space for nearly ~10 years, I know that choosing a PEO can be confusing at first, especially if you’re unfamiliar with the model.

There are a ton of options out there these days and even more key differences between each one (industry focus, benefits quality, people support model, employee experience, technology, etc.) so define your buying criteria early on and get a set of questions ready that align with your company's current & future needs.

If you'd like to learn more on evaluating PEOs, I wrote a brief LinkedIn post about evaluating PEOs here. You can also reach out to me directly: [email protected]

Looking ahead:

The California fertility mandate represents just one example of how regulatory changes can create strategic opportunities for nimble companies. As healthcare continues to evolve, similar opportunities will emerge for organizations willing to look beyond traditional benefits structures.

My take on the new mandate is this:

Today, there lies a lack of education, understanding, and comfort in discussing fertility benefits. Societal taboos or stigmas surrounding infertility and reproductive health have been a barrier slowly overcome due to personal, cultural, or religious beliefs pertaining to the topic. Diagnoses, treatments, and options can be intimidating and confusing for the average employee, which potentially leads to inaction or even a loss of trust in the process.

This law, I hope, represents a paradigm shift in how society perceives fertility treatment and how companies can be leaders in supporting healthier and happier families. I believe, and again I hope, it will lead to greater transparency and support that will promote a culture of understanding and compassion in this space.

Leveraging a PEO as a small group employer will only expand access & understanding to employees who value this kind of benefit while positioning their companies as employers-of-choice.

This post is provided for informational purposes only and should not be construed as legal, tax, or benefits advice. Consult with qualified professionals regarding your specific situation.

🦄 Hustle Fund Fireside Chat with Srini Panguluri & Elizabeth Yin

Attended the Hustle Fund fireside chat with Srini Panguluri & Elizabeth Yin last week, and I can confirm it was worth the drive from Hermosa to DTLA at 6:00pm on a Wednesday!

I wrote about my takeaways you can read here on LinkedIn:

📊 Participate in 2025 Benefits Benchmarking Survey!

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✔️ Ready to participate? Take the survey now:

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