If you’re considering using donor eggs to grow your family, oftentimes, the associated costs can be a significant financial burden. In this comprehensive guide, we delve into the question of whether Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can be utilized to pay for donor eggs. We also explore other financing options available to individuals seeking fertility treatments.
The TLDR: you can use your HSA or FSA towards some (but not all) expenses related to donor egg cycles, and if you’re part of the LGBTQ+ community, you may unfortunately face a harder time getting reimbursed, given what the IRS defines as “medical necessary”.
Let’s dive into the details.
How HSAs and FSAs work
First, it’s important to have a fundamental understanding of how HSAs and FSAs work. These are both valuable financial tools that allow you to allocate pre-tax dollars toward qualified medical expenses, and can help reduce the burden of healthcare costs and out-of-pocket expenses.
To maximize the benefits of HSA and FSA accounts, it is important to understand eligibility criteria and contribution limits set by the IRS. These guidelines ensure compliance and provide you with an opportunity to save for future healthcare expenses.
While HSAs and FSAs serve a similar purpose, there’s actually some nuance to it. their differences to make an informed decision about which one best suits your needs. Let's delve into the specifics of each type of account, and how it relates to donor eggs.
Health Savings Accounts (HSAs)
To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP). Here's what you need to know about HSAs:
- Pre-tax contributions: Contributions to an HSA are made with pre-tax dollars, which means the money is deducted from your paycheck before taxes are calculated. This offers an immediate tax benefit by reducing your taxable income.
- Tax-free growth: Any contributions made to your HSA can grow tax-free through investment opportunities. This allows your HSA funds to accumulate over time and be used for future medical expenses.
- Portability: HSAs are portable, meaning you can take the account with you even if you change jobs or health insurance plans. The funds in your HSA remain available for qualified medical expenses, regardless of your employment status.
- Contribution limits: The IRS sets annual contribution limits for HSAs, which may change each year. For 2023, the contribution limit for an individual is $3,650, while for a family, it's $7,300. Individuals aged 55 or older can make additional catch-up contributions.
Flexible Spending Accounts (FSAs)
FSAs are another tax-advantaged option for healthcare expenses. Unlike HSAs, FSAs are typically offered through employers. Here are the key aspects of FSAs to consider:
Like HSAs, contributions to an FSA are made with pre-tax dollars, resulting in a reduction in your taxable income. However, unlike HSAs, there is no requirement for enrollment in a high-deductible health plan.
FSAs operate under a “use-it-or-lose-it” rule, which means any funds contributed to the account must be used within the plan year or within a limited grace period. However, some employers offer a carryover option or a grace period to allow some unused funds to be carried forward.
FSAs are typically established and managed by employers. The employer determines the contribution limit and plan rules, such as eligible expenses and rollover options. It's important to review your employer's FSA plan details to understand its specific features.
The IRS sets annual contribution limits for FSAs as well. For 2023, the maximum contribution limit is $2,850 per individual. However, employers may set lower limits, so it's essential to check with your employer for their specific FSA contribution limit.
Using HSAs and FSAs for donor eggs
HSA and FSA accounts can potentially be used to pay for donor eggs. When utilizing these accounts for payment, you’ll need to obtain detailed receipts from whatever party you are working with to match with an egg donor (be it an agency, egg bank, or matching platform like ours). This receipt can then be submitted to your HSA or FSA plan administrator for reimbursement, ensuring that the process is in compliance with the account guidelines. Better yet, discuss with them upfront what the pricing breakdown looks like so you know what expenses are involved ahead of time.
HSA and FSA eligibility for donor eggs
While HSA and FSA funds can generally be used for eligible medical expenses related to egg donation, depending on your unique expenses, it’s not outside the realm of possibility that something might not be covered. To be 100% sure, we recommend discussing with a tax professional or your company’s specific plan administrator which expenses are eligible for reimbursement.
LGBTQ+ considerations for HSAs and FSAs
The IRS guidelines and regulations governing eligible medical expenses are periodically updated to accommodate the changing landscape of fertility treatments. And when it comes to tax deductions, benefits, and credits in general, LGBTQ+ individuals may be impacted by the IRS’ specific wording around eligible expenses.
If you are part of the LGBTQ+ community, we recommend speaking to a tax professional to find out what may apply to you — at least until the Equal Access to Reproductive Care Act gets passed and modernizes federal tax codes to be more inclusive.
IRS guidelines and equal treatment
The Internal Revenue Service (IRS) has provided guidance to ensure that same-sex couples have equal access to the benefits and rights associated with HSA/FSA accounts. According to the IRS, same-sex couples who are legally married or in registered domestic partnerships are eligible to establish and contribute to an HSA or FSA, just like opposite-sex couples.
Qualified medical expenses and donor eggs
However, the IRS defines “qualified medical expenses” as those incurred for the diagnosis, treatment, or prevention of a medical condition. While specific guidance regarding the eligibility of donor eggs for HSA/FSA reimbursement is not explicitly stated, the expenses related to fertility treatments, including donor eggs, may be eligible if you meet the criteria for qualified medical expenses. However, with courts narrowly defining infertility as a medical inability to conceive, this unfortunately limits many LGBTQ+ couples.
Documenting eligible expenses
To ensure compliance and facilitate potential reimbursement, it is crucial to maintain proper documentation of your medical expenses. This includes obtaining detailed receipts and documentation of every related expense.
Maximizing HSA and FSA benefits for donor eggs
Strategic planning can help you maximize the benefits of using HSA and/or FSA funds for donor eggs. Understanding the timing of fund availability and expenses is important. Some people choose to utilize their funds earlier in the year, while others may find it advantageous to wait until the end of the year.
In addition to timing considerations, HSA and FSA accounts offer potential tax advantages and savings. The contributions made to these accounts are typically tax-free, and qualified withdrawals for eligible medical expenses are also tax-free. By understanding and leveraging these benefits, you can optimize you financial resources for fertility treatments.
Other financing options for donor eggs
Beyond HSAs and FSAs, there are other avenues to explore when seeking financial support for donor eggs. Insurance coverage for donor eggs varies depending on individual plans and policies, making it crucial to research and discuss potential coverage options with insurance providers.
Tax deductions may also be available for certain fertility treatments, including those involving donor eggs. Consulting with a tax professional can help determine eligibility criteria and potential deductions, providing individuals with further financial relief.
Additionally, there are grants, scholarships, and financial assistance programs specifically designed to support individuals undergoing fertility treatments. Researching and applying for those programs can offer additional avenues of financial assistance to those pursuing the dream of building a family through donor eggs.
At Cofertility, we understand the financial challenges individuals and couples face when pursuing fertility treatments, especially the use of donor eggs. To make the journey more accessible, we work with financing partners that can help alleviate the financial burden. While we do charge a coordination fee, we’re committed to accessibility and improving the family building process for all. To learn more about how we can help you grow your family via egg donation, create a free account to get started.
Costs of donor eggs with Cofertility
Our goal is to provide a family building experience that’s as human-centered and transparent as possible. As such, you can find a full breakdown of all costs involved with a donor egg journey through Cofertility, right here on our website.
Here’s how our unique egg sharing model works: rather than compensate a donor with cash, we empower women to take control of their own reproductive health while giving you the gift of a lifetime. Through our program, egg donors keep half of the eggs retrieved for their own future use, and donate the other half to your family. Because our donors aren’t paid in exorbitant cash lump sums, our structure helps lower costs for intended parents. It also means that the women in our program are truly incredible — and especially motivated to successfully help grow your family. Our model honors everyone involved: the intended parents, the donor, and ultimately, donor-conceived children.
When you work with Cofertility, your Member Advocate will be sure to provide itemized receipts and necessary paperwork that you may need to submit to your HSA or FSA plan.
Financial help can be out there
The journey to parenthood through donor eggs may present financial challenges, but with careful planning, research, and exploration of available resources, it may be possible to find the support you need. We’re here sending luck (and a helping hand) your way.
Arielle Spiegel is a Cofertility Co-Founder and Advisor. She previously founded the original CoFertility, a community and content platform that aimed to answer every fertility question, inspired by her own experience trying to conceive. She is incredibly passionate about starting the fertility conversation at an earlier age. Before founding CoFertility, Arielle spent several years in digital marketing at Victoria’s Secret PINK. She also led global social media activations for Coach and spent years agency-side, building social media strategies for various consumer brands. Today, Arielle lives in the Boston area with her husband, dog, and two miracle babies. She currently engages as a marketing strategy consultant for brands across industries.
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