Compliance & standards

Forma Research: Fertility stipend cost-of-living adjustment guidelines

Learn how to fund a fertility stipend that fairly supports employees and optimizes company costs.

 Min Read 

Key takeaways

  • Fertility stipends are a critical component of leading companies’ benefits strategies, but they can be difficult to administer and design for global workers.
  • Companies can use Forma's benchmark data to determine what fertility expenses to cover for their employees in a fertility spending account.
  • If companies give the same stipend amount to international workers as U.S. employees, businesses might encounter wasted spend.
  • To craft an equitable fertility stipend that saves companies money, benefits teams should use the basket of goods cost-of-living adjustment method - Forma Research has examples of how to easily convert dollars to help.

The vitalness of an equitable fertility stipend

Fertility benefits for employees are more prevalent than ever before. According to a Mercer report, the number of large employers offering in-vitro fertilization (IVF) in their benefits has doubled over the past decade. These programs not only provide practical assistance but also extend emotional and physical support to employees. Companies demonstrate a commitment to diversity, equity, and inclusion (DE&I) and affirm their backing for employees throughout their parenthood journey.

Organizations can provide both tax-advantaged and taxable fertility stipends to U.S. workers via a Health Reimbursement Arrangement (HRA) or a Lifestyle Spending Account (LSA). But when well-meaning benefits professionals seek to extend such a stipend to workers in countries around the world, they might be challenged by decisions given regional, cultural, and economic contexts.

In this guide, you will discover how to design a fertility stipend for your global workers, and how you can implement cost-of-living adjustments (COLA) directly into the program.

A holistic fertility stipend that truly supports your people

A complete fertility treatment comprises several stages and services. It begins with testing and consultation, progresses through preparation and treatment, and concludes with supplementary services. A fertility stipend is designed to accommodate the diverse needs of employees by typically covering all expenses that can be funded through the allocated funds.

Forma Research analyzed how employees use their fertility stipend via Forma’s platform to give you an idea of what to include for support that makes a difference.

Chart 1: How employees spend their fertility stipend

Account for cost-of-living adjustments (COLA) to achieve employee fairness and cost savings

An easy path to define your fertility stipend might be to take the amount you are giving to U.S. workers, convert it to the right currency, and provide this amount to your global employees.

However, this can result in wasteful spending since the prices of goods and services vary from country to country. 

To help, Forma Research has suggestions for how you can account for these distinctions in the cost of living for your fertility stipend.

The approach

In Forma’s cost-of-living adjustments guideline, we suggest that for stipends like fertility, companies focus on specific usages and apply the basket of goods method. This involves choosing items, or a "basket of goods", that are anticipated for purchase with the stipend. Companies then can use this information to estimate the funding required to cover eligible expenses by country.

After you determine what expenses to cover, you will need to research the prices for these expenses in each country.

Forma Research found that the costs of fertility treatments such as IVF and egg/sperm freezing are significantly higher than other expenses. In addition, many clinics cover testing and medication in the cost of the treatments, so individuals don’t need to pay additional fees for these items. This is reflected in the spending data, too (see Chart 1). Therefore, Forma Research defines the basket value as the sum cost of one IVF treatment and one egg-freezing cycle. 

To discover how to use COLA guidelines your organization, Forma can support. <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Meet with an expert</span> to discuss the applications for your global benefits strategy. 

The results

The table below summarizes the COLA conversion rates for fertility stipends across fourteen countries.

Forma Research used the basket amount in the U.S. as a benchmark and compared the amount in each country to it. The results are displayed in the column “COLA Conversation Rate” so the stipend amount can be easily converted from U.S. dollars to other countries’ currencies.

Table 1: Conversion rates using the basket of goods method

An example

Let’s illustrate how companies can implement COLA and how employers can benefit with a concrete example.

Say you offer a fertility program with the below characteristics:

  • You offer the program to your employees in the U.S., Germany, Japan, and Mexico. 
  • There are 200 eligible employees in each country. 
  • You set the stipend benchmark at 20,000 USD per employee for U.S. employees. 

Without COLA, you give employees across all countries the same amount you give your U.S. workers, just converted to their currency.

With COLA, the stipend amounts can drop. For instance, Forma Research considered the basket amount in Germany. Per Table 1, a U.S. worker needs to spend 35,000 USD to get the same fertility treatments that a German worker could get for just 7,000 EUR. When you factor this difference in cost-of-living, the same 20,000 stipend amount that you give to U.S. workers should be adjusted to 4,000 EUR for German workers – 20,000 times 0.20, the COLA conversion rate. 

Playing out this same scenario for the other countries presents significant cost savings. The total budget with COLA is nearly $8M USD-equivalent whereas the budget without COLA is $16M USD-equivalent. There is a 51% reduction in costs for the employer while continuing to provide an equitable benefits experience to employees.

Table 2: How COLA impacts company costs

How Forma can help

To give your workers everywhere a benefit that meaningfully supports their family planning, cost-of-living adjustments are an important tool to generate an equitable benefit. When in need of assistance on your strategy and execution, Forma is here to help. We can help implement COLA for any country as you build your flexible benefits program for fertility stipends and more. <span class="text-style-link text-color-blue" fs-mirrorclick-element="trigger" role="button">Schedule a customized consultation</span> with one of our experts today. 

Read about other ways the world's leading companies can use COLA guidelines to support people everywhere:

About Forma Research

Forma Research provides benchmark reports, best practices guides, data tools, and other resources to help HR professionals and brokers expand their understanding to become experts on flexible benefits and Lifestyle Spending Accounts (LSAs).

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