Family-Forming Benefits
Five Things to Know
- UC offers residents and fellows up to $30,000 toward the cost of fertility and family-forming benefits through our partner, Carrot.
- Carrot offers personalized step-by-step guidance, educational resources, and at-home support for egg/sperm/embryo preservation, in vitro fertilization (IVF), adoption, menopause, low testosterone (low T), and pregnancy.
- Treatment that does not qualify as medically necessary is considered imputed income and is taxable to you.
- Imputed income will affect a future paycheck, so it’s important you understand how the Carrot benefit works.
- Learn more about Carrot and get started today.
Wait! Before you start, know this about taxes
If your fertility service is not considered a qualified medical expense (QME), as defined by the IRS, any amount you have reimbursed through Carrot will be considered what’s called imputed income, meaning the benefit amount you receive will be reported on a future paycheck as taxable income, and taxes will be withheld, possibly reducing your net pay.
About Carrot
We’ve partnered with Carrot to bring you comprehensive, inclusive and accessible fertility health care and family-forming benefits to support your unique journey.
Get personalized step-by-step guidance, educational resources, and at-home support for egg/sperm/embryo preservation, in vitro fertilization (IVF), adoption, menopause, low testosterone (low T), and pregnancy.
Who’s Eligible
Residents and fellows who work 20 or more hours per week and are enrolled in the UC Residents and Fellows Health Plan, and their eligible family members. Family members do not have to be enrolled in the UC Residents and Fellows Health Plan.
Get Started With Carrot
To get started, visit get-carrot.com/signup to create your account. Register using your UC resident or fellow email address as entered in PlanSource, so Carrot can confirm you are a UC resident or fellow. You can change your email address after you register.
What’s Covered
We’ve partnered with Carrot to bring you comprehensive, inclusive and accessible fertility health care and family-forming benefits to support your unique journey. Some services may need to be recommended and supervised by an eligible health care professional before they can be reimbursed.
For more information about covered treatments and services, read the plan summaries for fertility, adoption and gestational surrogacy.
Testing and Diagnostics
- Initial fertility consultation
- Transvaginal ultrasound baseline
- Semen analysis
- Lab tests and diagnostic procedures
- Genetic carrier screening
Treatments
- In vitro fertilization (IVF)
- Intrauterine insemination (IUI)
- Donor sperm acquisition
- Egg and sperm storage
- Shipping and transport of materials
Fertility Preservation
- Egg retrieval
- Egg, sperm and embryo freezing
Adoption and Gestational Surrogacy
- Adoption-related legal services or agency services
- Gestational surrogacy-related legal or agency services
Pregnancy Support
Access additional pregnancy support with online prenatal yoga and meditation classes and unlimited virtual visits with OB-GYNs, lactation consultants, nutritionists, midwives, doulas and emotional well-being experts.
Prescription Savings
Once a Carrot member, you have access to Carrot Rx, a specialty pharmacy for your fertility medications, vitamins and supplements. Carrot Rx offers competitive prices, convenient delivery and 24/7 personalized support to help manage your medications. Most medications are available to be shipped the same day they are ordered or the very next day. Access your Carrot Rx card online through your Carrot account.
Home Fertility Tracking
Track your ovulation, complete sperm analyses, and take female fertility and female wellness tests from the comfort of your own home.
Have Questions?
Now, you can call your Carrot Care Team at (855) 459-0059 for help when you need it. A Carrot representative is available from 5 a.m. to 3 p.m. PT Monday through Friday by phone and 24 hours a day Monday through Friday by email.
Before you begin receiving care, it’s important to understand that the benefits may be taxable. The IRS may consider the funds you receive from UC toward Carrot services to be additional (imputed) income and therefore taxable. When you use Carrot funds, your monthly payroll check from UC will reflect the money used as additional taxable income, and taxes will be withheld, possibly reducing your net pay. See when and how benefits are taxed.
Paying for Services
Once registered with Carrot, you can request a Carrot Card — a prepaid card that’s directly funded by UC. The Carrot Card ensures you are not responsible for any out-of-pocket costs when you use it to pay for eligible expenses, up to the $30,000 lifetime maximum. Each time you use your card, you’ll receive an email requesting a receipt for verification of the expense. Just submit your itemized statement!
The Carrot Card will be mailed to you within 1–2 weeks of your request. Make sure to activate your card before using it for the first time. Once you start using the card, you can track your spending and view your balance online in your Carrot account.
You can also pay out of pocket and submit a claim to Carrot for reimbursement.
When and How Benefits Are Taxed
Talk to Carrot
Carrot can’t offer tax advice, but they can help you understand what services may be taxable. Contact Carrot to schedule a Zoom call with one of Carrot’s benefit experts, who can explain the potential tax implications based on the care you are interested in.
In general, benefits you receive through Carrot for care not classified as a qualified medical expense (QME) are considered taxable income by the IRS and subject to employment tax withholding. A good rule of thumb is if the care you receive is not medically necessary, you may be taxed. When you use Carrot services, UC will withhold taxes based on the value of the services you receive. Since this can reduce your net pay, it’s important to consider the possible tax implications before signing up with Carrot or receiving care.
Benefits That Are Not Taxable
Generally, care that qualifies as a qualified medical expense (QME) is not considered taxable income. This includes services for fertility or preservation related to a diagnosis of infertility or medical necessity as determined by a fertility doctor.
Benefits That Are Taxable
Care that does not meet the qualified medical expense standard is generally considered taxable. This includes:
- Fertility* and preservation care not related to an infertility diagnosis or medical necessity
- Donor assistance, gestational surrogacy* and adoption services**
- Doula services and human milk shipping services
*Carrot benefits you receive toward fertility and surrogacy services are considered taxable wages for income and employment tax withholding purposes. See the fertility and surrogacy guides for more details. For more information about the tax implications of fertility services, visit irs.gov/publications/p15b.
**Carrot benefits you receive toward adoption expenses may be excluded from your federal taxable income.
- If you adopt a child, you may claim both a tax exclusion and a tax credit.
- For an expense, you may claim either a tax exclusion or a credit.
- You may not claim a tax credit for a reimbursed expense that is excludable from your federal taxable income.
See the adoption guide for more details.
This should not be construed as tax advice. You are advised to consult with a tax and/or legal advisor before accessing benefits through the UC Adoption Assistance Plan.
When Benefits Are Taxed
After you receive care, you must complete some tasks to ensure you’re taxed correctly:
If You Pay Out of Pocket
If you pay for treatment or services out of pocket and then submit a claim to Carrot:
When you submit your receipts to Carrot, you’ll be asked to verify certain information to determine if the services are taxable:
- Was the care received related to an infertility diagnosis issued by a fertility doctor?
- Was the care received considered by a doctor to be medically necessary due to another treatment that could affect reproductive health, such as chemotherapy or surgery?
If the answer to these questions is “no,” your benefits will be reported as taxable income.
After submitting your request, you will be notified once the expense has been approved with a disclaimer on taxability. Taxes are based on where you live and the type of care you received.
If you have additional questions about what information you need to submit (itemized bill, invoices, documentation, receipts, etc.), you can connect with a Carrot Care team member at (855) 459-0059 from 5 a.m. to 3 p.m. PT Monday through Friday.
If You Pay Using Your Carrot Card
If you pay your provider using your Carrot Card, you must provide proper documentation for the expense within 30 days of the treatment or service. Your documentation must clearly demonstrate that the treatment or service received meets the definition of a qualified medical expense. Otherwise, the value of the treatment or service will automatically be reported as taxable income, even if it may not be. If you are not sure whether a treatment or service qualifies as a QME, contact Carrot.
If your documentation isn’t received within 30 days, the value of any services received may be treated as taxable income, even if it would otherwise not be. Your Carrot Card may also be locked.
At the end of this process, you will have to acknowledge that taxes may apply. For more information, visit the Carrot Help Center for articles about taxability and qualified medical expenses (QMEs).
If you have additional questions about what information you need to submit (itemized bill, invoices, documentation, receipts, etc.), you can connect with a Carrot Care team member at (855) 459-0059 from 5 a.m. to 3 p.m. PT Monday through Friday.
Tax Example
Scenario 1
This is an example and used for illustration purposes only. Individual situations will vary. The description below is not representative of any individual or expected tax withholding amounts. Please consult with a tax advisor for your individual situation.
A UC resident earns $7,000 monthly in gross earnings and gets paid on the first of every month. $1,400 is withheld for taxes such as federal income tax and FICA tax. The net pay to the resident is $5,600.
The resident’s typical paycheck:
The resident created a Carrot plan and starts a family forming journey for Egg Preservation. The resident informs Carrot they do not have a QME In July and completes services and pays out of pocket for egg preservation. In August, the resident submits $4,000 of expenses to Carrot for reimbursement. The resident receives approval from Carrot that the expenses have been approved. Carrot reimburses $4,000 to the resident on August 20.
Since the resident’s services are not consider a Qualified Medical Expense, they can expect the $4,000 dollars to be reflected as additional income on the next following paycheck (October 1). The resident’s paycheck will have a new line of other earnings on their paycheck.
Note: UC will report the taxable benefits as additional income in the next following month’s paycheck after the date you received your reimbursement. In this scenario, reimbursement was received in August, therefore the taxable benefit will appear on the October 1 paycheck.
For the October 1 paycheck, the resident will see the additional income reported as other non-cash earnings. The resident now sees an additional $800 withheld for taxes. The gross earnings remains the same at $7,000, and $1,400 is withheld for taxes on the gross earnings. An additional $800 is withheld for taxes on the benefit received from Carrot. The October net pay is $4,800.
The resident’s paycheck with Carrot Benefit included reflects the following:
Want to Learn More?
For answers directly from the experts, view the recorded webinar and Q&A below.
