Fertility benefits startup Carrot wants to tackle the affordability gap in fertility treatment, and just launched an employer-backed flexible spending program to make it happen

Courtesy of Carrot

Tammy Sun

• Carrot Fertility, a fertility benefits startup that works directly with employers, announced Tuesday it was launching a flexible spending debit card to help patients pay for fertility treatments.
• Carrot Fertility founder and CEO Tammy Sun told Business Insider that patients often have to pay for treatments upfront even if they are covered under an employer-provided benefit.
• The Carrot Card is a debit card but is different from a traditional flexible spending account or health savings account because the employer is responsible for loading the card with funds instead of taking funds out of the employees' paychecks.
• Sun told Business Insider that employees with coverage still struggle to afford often expensive fertility treatment, but she didn't feel like her company should provide loans similar to other providers like Future Family.
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Fertility treatments are still financially out of reach for many, but one Silicon Valley startup thinks it has figured out a way to bridge the gap.

On Tuesday Carrot Fertility, a fertility benefits startup with $15.22 million in venture funding, launched a flexible spending debit card to help patients pay for fertility treatments. The Carrot Card lets employers load the card with funds which patients can then use to pay for treatments upfront.

"There really is no real problem to solve first," Carrot Fertility founder and CEO Tammy Sun told Business Insider. "You have to solve accessibility by tackling affordability. You can earn the right to tackle other problems in the space, but if you can't get access to healthcare because you can't afford it, the experience is secondary."

Read More: There's a boom in VC funding for fertility startups. But female founders say they still have a hard time getting men to invest.

Fertility has been one of the hottest areas of tech, with more than $320 million pouring into a range of fertility treatment startups in the last year alone. But even as VCs and founders tune in to a massive market opportunity, patients are still left shouldering a massive bill for treatments.

Sun explained that, before the Carrot Card, all patients paid for treatments out of pocket upfront whether or not they were covered by an employer-backed benefits plan like Carrot Fertility. Any employer offering Carrot Fertility reimburses patients for any out of pocket costs, but this leaves patients scrambling to come up with the initial payment that are typically thousands of dollars.

"Part of that access problem includes income diversity," Sun explained. "Most people don't have lines of credit that can sustain paying for fertility treatments even at some of the newer providers that are purportedly bringing down the costs of care."

Some startups, like Future Family, have earned high private valuations by offering these patients financing plans to help pay for fertility treatments. The financing plans are effectively low-interest loans, which is something Sun said she wanted to steer clear of when her team was looking for a solution to the affordability gap in fertility treatment.

"I think loans are a great solution for some people," Sun said. "But my philosophy is that fertility is something millions of people need access to and haven't had, so we want to enable access to this type of treatment without incurring medical debt."

Unlike a traditional flexible spending account or health savings account, Carrot Card is completely funded by the employer as part of its contract with Carrot Fertility. With the traditional benefits, an employee could elect to set aside tax-exempt contributions to the card from their paychecks. Sun explained that the physical card had been a request from several new customers Carrot Fertility has signed in the hospitality and services spaces because employees don't always see a consistent paycheck.

"There is an increased acceptance and adoption in new segments of the economy that didn't exist before," Sun said.

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