•  Financing Infertility Treatments

Some kinds of fertility treatments, such as donor insemination in a natural cycle, are relatively inexpensive. But a few rounds of an invasive procedure like in vitro fertilization (IVF) may cost as much as heart surgery and many insurance companies won't cover them. If you're contemplating fertility treatments, you and your partner should begin by doing a little homework.

First, find out what your insurance does or doesn't cover. If you're not sure, work with a financial counselor at a fertility clinic. Even if your insurer doesn't pay for IVF or intrauterine insemination, your plan may cover diagnostic procedures, such as blood and hormone testing.

If you have to bear all the costs of fertility treatments yourself, determine what your personal limits are. Can you afford only one cycle of IVF, or three? In the event that you are unable to conceive through IVF, you may want to ask yourself whether you will have enough money left over for an adoption or donor egg procedure.

You should also consider talking to a tax adviser. Fertility treatments are a legitimate tax-deductible medical expense. You may be able to set up financing plans and itemize medical deductions at tax time.

Once you decide to move forward, look for sources of cash that don't require you to pay interest:

•Many employers offer flexible spending plans that allow you to deduct a little bit out of your paycheck to finance medical treatments not normally covered by insurance. The advantages are that each month you can put away a little bit of your pre-tax earnings, and lower your tax liability at the end of the year. The cons? You have to make the payments up front before you submit a claim for reimbursement, and if you don't use up what you put aside in any given year, the plan gets to keep the balance.

Paul Cheatham, MBA, a tax consultant based in Rancho Cucamonga, California, uses the example of one couple that financed IVF treatments themselves and paid out $20,000. They were able to deduct $3,400 off their taxes by taking a medical deduction. But if they had established a flexible spending plan beforehand, they would have doubled their savings. "Instead of saving $3,400 they would have benefited by saving $8,000," he says. "It's a much better way to go."

•Consider taking a loan from a family member. Since you're starting a new family, it's not unusual to ask members of your family for assistance. Would-be grandparents who are affluent can give a gift of $12,000 or more per year, and it doesn't have to be counted as income on your taxes. And there may be an added benefit to your benefactors: giving the gift now can lower their estate tax later, Cheatham says. And if you do take out a loan from a bank or creditor later, you're not required to disclose these loans from your family.

•Consider taking out a loan from your 401(k) or IRA account. Don't cash out your retirement savings, however, because the tax liability is high and you'll have to start saving again from scratch.

If you're looking at financing programs, consider short-term financing that won't require you to make high monthly payments you can't afford.

•Ask your clinic whether it has a financing program with low monthly payments, low fixed rates, and no prepayment penalties. Many clinics have programs that allow you to plan your payments according to the procedure you've chosen. Others may offer participation in clinical trials, which often involves a substantial decrease in costs.

If the clinic doesn't have a favorable interest rate, consider putting the procedure on a low-interest credit card. Because of the recent drop in interest rates, bank customers with good credit histories can expect cards that offer fixed rates as low as 5.9 percent.

•Investigate third parties who broker bank loans to finance these treatments. The growth in the number of fertility treatments performed every year in the United States has spawned a new type of financial service center: firms that cater only to clients seeking financing for fertility services. You may be able to get a referral from your doctor. Some brokers work with doctors so that the payments are sent directly to their offices and, like a car loan, are spread out over up to five years.

The advantage is that these are unsecured loans that don't require you to attach your home or other property, and you won't be raiding your emergency funds. The disadvantage is that the rates are often higher than many credit cards today and, like all personal loans, aren't tax deductible.

Fortunately, if you do own a home, you can refinance to obtain cash or take out a home equity loan that's tax deductible. Some lenders can also establish a line of credit that can be used as necessary.

After you've paid your medical expenses, you may be able to deduct some of them on your tax return as itemized expenses. This is tricky, however, since your expenses have to exceed 7.5 percent of your income. And because expenses are deductible only in the year paid, tax preparers recommend doing most of your medical expenses in one year so that you can qualify for this benefit.

Finally, proceed with caution when considering any of these financing arrangements, and make sure you preserve a good credit rating. You don't want to be too overextended financially at a time when you'll also be paying for your child's health care, schooling, and other costs. Also, be sure and consult with your tax accountant to determine the benefits and ramifications of these expenses on your taxes.

Unlike homes, cars, or large appliances, children are a lifetime commitment. Make sure you have savings left over for the things in life that matter.

-- Psyche Pascual is an articles editor at Consumer Health Interactive. She formerly worked as a staff writer at the Los Angeles Times and as a business writer for the Contra Costa Times.

References

First published December 19, 2002
Last updated May 27, 2008
Copyright © 2002 Consumer Health Interactive

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