After a couple years of marriage, Kellie and I were beginning to suspect that we couldn’t have children naturally. This was a serious downer, but the path to growing our family through in-vitro fertilization (IVF) was lighted as we talked with friends and family who shared the same disheartening experience but later found success.

But there was another problem at work--it was financial. IVF costs a TON of money and health insurance didn’t cover much of it. We’re talking around $15,000 for the whole process, and that assumes it actually works for you the first time around. In our case, “retries” are another $2,700 each. (I’m in the wrong business.)

We were diligent savers with a sizeable emergency fund--perfect for something like this--but one IVF attempt would have bled our fund dry.

Our financial boon laid in a tool that I’ve praised on my blog before, but not enough young families are paying attention to it.

The Steep-Medical-Cost Gamechanger: The Health Savings Account

So what is this tool that changed our picture financially? It’s the Health Savings Account, better known as a HSA. Why did our HSA make such a big difference compared to paying for IVF a different way? You’re welcome to read my blog post where I go into greater detail of the HSAs benefits--specifically it’s triple tax benefit--but here’s the short list:

A person or family with a high deductible health plan can utilize a HSA
HSAs have relatively high maximum contribution levels each year
Contributions into your HSA are tax deductible...more specifically, though, they are deductible as more advantageous “Above-the-Line” deductions
Many HSAs contain investment options allowing your contributions to grow tax-free
Eligible withdrawals for qualified medical costs are tax-free
Contributions don’t need to be spent in the year they’re made, like an FSA. If you don’t use your HSA funds year to year, they stay with you.

Your "Above-the-Line" deductions used to determine AGI.

These benefits made a very real impact on our financial picture. The HSA tax deduction alone meant actual dollars saved--dollars that could go towards our living expenses or other priorities for our family.

Futility of the Alternatives

Were there other ways to fund our IVF costs? You bet! There are a number of strategies to deploy that could be used to cover medical costs, but they paled in comparison to what the HSA offered.

Simply saving cash--either in a separate account or tapping into our emergency fund--was the most direct path, but it provided no added tax incentive. Using our emergency fund was sacrificing one financial priority for another. That’s not necessarily a no-no, but we wanted to avoid it if possible.

What about raiding our retirement accounts? Also an option, but not only are there no additional incentives to do so, but we would end up being penalized on the withdrawals as “wanting to have some IVF babies” isn’t on the list of non-penalized early withdrawal exceptions for IRAs or 401(k)s. Blast!

Credit cards? Nah! Mooching from wealthy in-laws? Tempting, but that can get awkward. In the end, no other approach made more sense to us than using our HSA.

With a habit of living well below our means, Kellie and I began the relentless pursuit of maxing out our HSA each year. The IVF process takes time--lots of doctor appointments, lots of exams, lots of needles--so we had time to re-prioritize our financial goals and focus our saving efforts. The generous maximum contribution limits of HSAs ($6,750 per year for a family) meant we could make a big dent in that inevitable $15,000+ expense (that doesn’t include delivering the baby, by the way).

Within a couple of years our HSA had sufficient funds to cover nearly the entire cost of the IVF process.

Making Sure Your HSA Works for You

It’s been about two years since our daughter was born, and we’re back on the same journey--seeking to grow our family of IVF babies! We’re feeling a lot smarter and more confident in the benefits our HSA can provide.

For those considering how an HSA should fit into their financial picture, here are a few points of guidance, whether you’re using the funds to grow your family or for any other medical purpose:

Consider when your HSA funds will be needed

This may help dictate whether or not you should invest the funds for tax-free growth and how aggressive the investing can be. Some good general advice is to not invest your HSA funds if you plan to use them within a few years.

Health costs aren’t going away, they’re going up

My wife is a very healthy, hot yoga addict. I’ve known few people healthier than her and she’ll probably live to 250 with few ailments along the way. I, on the other hand, have had my fair share of health issues and will likely continue to. Our health costs aren’t going away anytime soon, in fact they’ll probably go up. As a result, Kellie and I are trying to max our HSA every year if possible.

Prioritize your financial levers

The typical mindset in the financial planning community is to prioritize your savings in this way:

Contribute enough to earn your full 401(k) match
Max out your Roth IRA
If you have funds left to invest, continue contributing to your 401(k)

For most families this makes a lot of sense and I typically suggest the same guidance, but my family situation (and possibly yours) isn’t like most. With growing and caring for our family as our top financial priority, we’ve passed temporarily on maximizing our retirement contributions (I don’t have a 401(k) match available to me) in order to fund our HSA.

Your situation may look very different, but I’d suggest taking some time as a family to first understand what your priorities are and then adjust the main “financial levers” (retirement contributions, HSA contributions, debt repayments) accordingly.

Our first IVF baby, Eleanor. 15 months old at our Star Valley home.

Kellie and I just returned from Salt Lake City yesterday, having completed another successful “transfer” of two embryos at the IVF clinic. We’re anxiously awaiting the future pregnancy test when we’ll know whether we’re expecting another addition to our family. We are fascinated by the modern world we live in and its technological advances. We wouldn’t be at this stage without incredibly smart innovators, skilled nurses and sharp doctors.

The HSA is a “financial advance” of our modern world. It provides tremendous financial incentives where many American families need them most--in caring for their family’s health. If you have an HSA available, consider how it might better fit into your family’s current and future health needs.