Can You Use a Flexible Spending Account for IVF?

Flexible Spending Accounts (FSAs) offer a tax-advantaged method to manage healthcare expenses, allowing participants to use pre-tax income for qualified medical costs. This article explores how FSAs can be utilized to cover various expenses related to In Vitro Fertilization (IVF) treatments.

Understanding Flexible Spending Accounts

A Flexible Spending Account (FSA) is an employer-sponsored benefit that enables employees to set aside pre-tax money from their paycheck to pay for eligible healthcare expenses. Funds elected by the employee are typically available at the beginning of the plan year, providing immediate access to the full annual contribution.

Eligible In Vitro Fertilization Expenses

The Internal Revenue Service (IRS) generally considers In Vitro Fertilization (IVF) and related fertility treatments as qualified medical expenses, making them eligible for Flexible Spending Account (FSA) reimbursement. These expenses must be incurred for medical care, which includes the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body, as outlined in IRS Publication 502.

Specific procedures, such as egg retrieval and embryo transfer, are eligible expenses. Costs associated with diagnostic tests, including blood tests and ultrasounds, also qualify for reimbursement. Prescription medications, like fertility drugs, used as part of the IVF process are covered. Fees for egg or sperm donors, when part of a medically necessary reproduction plan, are typically eligible.

Counseling services directly related to fertility treatment, if medically necessary, can be reimbursed through an FSA. Temporary storage fees for eggs, sperm, or embryos are also considered eligible, provided they are for medical necessity and generally for a period not exceeding 12 months. Complementary therapies, such as acupuncture, may also be covered if prescribed by a physician as part of the overall treatment plan.

Using Your FSA for IVF Costs

Utilizing a Flexible Spending Account (FSA) for In Vitro Fertilization (IVF) expenses involves specific steps to ensure proper reimbursement. Many FSA plans offer a debit card, which can be used directly at the point of service, such as a fertility clinic or pharmacy. Using the debit card streamlines the payment process.

When an FSA debit card is not accepted or available, or if you prefer to pay out-of-pocket, you will need to submit a claim for reimbursement. This process typically involves completing a claim form provided by your FSA administrator and attaching supporting documentation. Essential documentation includes itemized receipts, an Explanation of Benefits (EOB) from your insurance provider, and potentially a doctor’s note or Letter of Medical Necessity (LMN) for certain services or items. These documents must clearly show the date of service, description of the service or item, the amount paid, and the provider’s name. Claims are usually submitted online, through a mobile app, or by mail or fax, with most claims processed within a few business days. Maintaining thorough records of all expenses is important, as the IRS may require substantiation.

Important Considerations for Your FSA and IVF

Planning for In Vitro Fertilization (IVF) expenses with a Flexible Spending Account (FSA) requires careful consideration of the account’s rules and limitations. A primary rule governing FSAs is the “use-it-or-lose-it” provision, which dictates that any funds not spent by the end of the plan year are forfeited to the employer.

To mitigate this, many employers offer either a grace period or a limited carryover option. A grace period typically provides an additional 2.5 months after the plan year ends to incur and use remaining funds. Alternatively, some plans allow a limited amount of unused funds to be carried over into the next plan year; for example, the maximum carryover amount is $640 for 2024 and $660 for 2025. Employers typically offer one of these options, but not both.

When contributing to an FSA, it is important to estimate potential IVF costs for the upcoming year to avoid forfeiting unused money. The IRS sets annual contribution limits, which can change each year; for 2024, the maximum employee contribution is $3,200, increasing to $3,300 for 2025. These limits apply per employee, meaning if both spouses have access to an FSA through their employers, they can each contribute up to the maximum. It is essential to consult with your specific FSA plan administrator or human resources department for the exact rules, eligible expenses, and procedures, as plan provisions can vary.