For whatever reason; pace of life, having kids later in life etc, few couples I know seem to be able to get pregnant without some amount of help. This seems to just be a fact of modern life.
As you can imagine, the cost of help with conception can vary greatly depending on what is required. Procedures start at a couple of thousand dollars and run up to the ultimate option which is In Vitro Fertilization or IVF. Based on a 2014 study, the median out-of-pocket expenses for a couple undergoing IVF was more than $19,000. IVF may take several cycles with the probability of success increasing with each round to around 90% by the third. Each cycle typically costs somewhere around $12,000. Many providers sell packages that allow multiple attempts for one up front price. In 2016 a three cycle package can be found for around $25,000.
The good news is with that level of medical expenses, you are likely to get some help from Uncle Sam via deductions on your income tax return. That’s right! Fertility treatments including IVF are a legitimate medical expense and can reduce your income tax bill.
There are a couple of hurdles you have to get over to receive Uncle Sam’s contribution.
First you must itemize deductions (your tax return will have a Schedule A attached) rather than taking the standard deduction. If you own a house, earn a decent income and live in a state that has an income tax, you will likely be itemizing. If you are currently taking the standard deduction, significant medical expenses may push you into itemizing depending on your income.
The critical income figure is your Adjusted Gross Income (To see what your AGI is checkout line 37 on your tax return). AGI is important because you can only deduct medical expenses (of which fertility treatments are included) in excess of 10% of that number. The higher your AGI, the harder it is to deduct medical expenses.
More good news: You can likely deduct more in the way of fertility expenses than you are aware of. Eligible costs include:
Bills from the clinic
Equipment or supplies
Insurance copays (not paid with an HSA or FSA)
Medical miles (at $.17 per in 2017)
Buses, taxis, tolls and parking fees
Required lodging during medical procedures up to $50 per person per night ($100 per couple)
Others: check out IRS Publication 502 https://www.irs.gov/publications/p502/ar02.html
Even more good news; You don’t have to pay cash in order to take advantage of the deduction. These expenses count in the current year even if paid with proceeds from a loan or credit card. This allows some flexibility in financing treatments despite providers typically requiring payment up front.
For clients with good credit we have taken advantage of a 0% rate credit card for up to 15 months coupled with good tax planning to maximize the amount of deductible fertility expenses thereby reducing the overall cost of treatment via relief from income taxes. We help clients with this type of planning as part of our Comprehensive Engagement. If you are considering fertility treatment and would like to discuss financial impacts and possible savings, please give us a call. Or for more information check out the following articles: