Surrogate expenses are not eligible for reimbursement with a Flexible Spending Account (FSA) or Health Savings Account (HSA).
Why Are Surrogate Expenses Not FSA/HSA Eligible?
Surrogacy-related expenses—such as medical costs, legal fees, agency fees, or compensation to the surrogate—are not considered eligible medical expenses under IRS Code Section 213(d).
According to IRS Publication 502, only medical expenses incurred for the taxpayer, their spouse, or dependents qualify for reimbursement. Because a gestational surrogate is not the taxpayer, spouse, or dependent, any medical or related costs associated with the surrogate’s care do not qualify.
This rule applies even when the expenses directly support the conception or birth of a child intended to become the taxpayer’s dependent.
What’s Not Covered?
Medical care for a gestational or traditional surrogate
In vitro fertilization (IVF) or embryo transfer performed on a surrogate
Agency, legal, or contractual surrogacy fees
Compensation paid to the surrogate for services or expenses
Travel, lodging, or administrative costs related to surrogacy
LMN and Exceptions
Surrogate expenses are not eligible under any circumstances, even with a Letter of Medical Necessity (LMN).
However, some fertility-related expenses incurred directly by the account holder or their spouse may qualify for reimbursement—such as:
Egg retrieval and storage fees (for the account holder or spouse)
IVF procedures performed on the account holder or spouse
Fertility medications prescribed to the account holder or spouse
To determine which fertility expenses qualify:
Confirm that the medical service or product was provided to the account holder, their spouse, or dependent.
Review IRS Publication 502 for eligible fertility-related medical procedures.
Keep itemized receipts and documentation in case of review by your FSA/HSA administrator.
Any surrogacy-related expenses paid for another person, including a gestational carrier, remain ineligible for reimbursement.
