Does an HSA Cover Fertility Treatments?

A Health Savings Account (HSA) provides a tax-advantaged method for individuals with high-deductible health plans to save and pay for qualified medical expenses. An HSA can alleviate the financial burden of fertility care by allowing tax-free contributions, growth, and withdrawals for eligible expenses.

HSA Eligibility for Fertility Treatments

The Internal Revenue Service (IRS) defines qualified medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Fertility treatments generally fall under this definition, making many related expenses eligible for HSA coverage.

Specific eligible fertility expenses include in vitro fertilization (IVF), intrauterine insemination (IUI), and associated laboratory fees. Fertility medications, such as hormones to induce ovulation, are also covered. Diagnostic testing for infertility, consultations with reproductive endocrinologists, and even surgeries to reverse prior procedures that prevent conception are considered qualified medical expenses. Temporary storage of eggs or sperm is an eligible expense. Travel expenses incurred to receive medical care, including mileage and lodging, can also be covered by HSA funds if directly related to the treatment.

However, not all fertility-related costs qualify for HSA reimbursement. Expenses for elective procedures not directly treating a medical condition are generally excluded. Costs associated with surrogacy for the surrogate, such as medical care for the surrogate mother, are not eligible. While temporary storage of genetic material is covered, long-term storage is generally not. It is important to confirm specific eligibility with an HSA administrator or by consulting IRS Publication 502 on qualified medical expenses.

Utilizing Your HSA for Fertility Expenses

Using an HSA for eligible fertility treatment costs offers flexibility in payment methods. Account holders can directly pay for services using an HSA debit card. Many HSA providers also facilitate direct online payments to healthcare providers from the account portal. Some individuals may even opt to use checks linked to their HSA for payments.

Alternatively, individuals can pay for qualified medical expenses out-of-pocket and then reimburse themselves from their HSA at a later date. This strategy allows the HSA funds to continue growing tax-free in the account. Reimbursement can be done via online transfer or check. Expenses must be incurred after the HSA was established to be eligible for tax-free reimbursement.

Meticulous record-keeping is important when utilizing an HSA for tax purposes and in case of an IRS audit. Account holders must retain all receipts, invoices, and Explanation of Benefits (EOB) statements that document the qualified medical expenses. Without proper documentation, any withdrawal that cannot be proven as a qualified medical expense may be subject to income tax and a 20% penalty. Records should be kept for at least three years after filing the tax return.

Navigating Uncovered Fertility Costs

When HSA funds are insufficient or if certain fertility-related expenses do not qualify for reimbursement, individuals have several alternative financial strategies to consider. Employer benefits can sometimes provide coverage for fertility treatments, so it is advisable to explore these options thoroughly. Some employers may offer specific fertility benefits through dedicated programs or providers.

Specialized fertility financing programs and medical loans are available through various lenders. These options, such as those offered by LendingClub Patient Solutions, CapexMD, or Future Family, are designed to cover a range of fertility treatments including IVF, egg freezing, and medication. These loans can help spread the significant upfront costs into more manageable monthly payments, often with fixed interest rates.

Other financing avenues include personal loans, home equity loans, or lines of credit, though these carry different repayment terms and risks. For smaller, immediate costs, some credit cards offer introductory 0% Annual Percentage Rate (APR) periods, which can provide a temporary interest-free solution if the balance is paid off within the promotional timeframe. Additionally, non-profit organizations and foundations may offer grants to help offset the cost of fertility treatment.