OBJECTIVES Tubal ligation is highly efficacious at preventing pregnancies; however it is considered irreversible, resulting in information requests about reversal or in vitro fertilization. The study objective is to compare the cost-effectiveness of LNG-IUS (MIRENA®) and tubal ligation on contraception from a US payer's perspective. METHODS A Markov model was developed to simulate costs savings associated with switching 2% of women (N=2841) requiring contraception from tubal ligation (31.9-29.9%) to LNG-IUS (4.3-6.3%). The study population was based on a 1 million member plan and included females age 18-45 who desire contraception (N=142,031). Method failure (resulting in ectopic pregnancy, spontaneous abortion, induced abortion, or birth), adverse events, and resource utilization were derived from the literature and supplemented with expert opinion when needed. Contraception drug cost for LNG-IUS was taken from Medi-Span Master 2007 Drug Database. Cost of tubal ligation was derived based on resource utilization and the national payment for relevant diagnosis-related groups (DRGs) from the Ingenix DRG Expert. Physician service and office visits costs were obtained from the average fees associated with the 2007 Procedural Terminology (CPT) codes. Both costs and effectiveness were discounted at 3% per year. Model outputs included pharmacy, medical, side effects, failure and total costs to the health plan for a two and five year time horizon. RESULTS An increase of 2% of LNG-IUS resulted in a total cost savings of $6,080,038, and $5,490,281 from a 2 and 5 year timeframe respectively. There was a decrease in total contraception costs by 3.37%, and 2.26% from both a two and five year timeframe respectively. Sensitivity analysis showed that LNG-IUS remained cost-effective up to 3 times the acquisition cost for both a two and five year time horizon. CONCLUSIONS Switching women from tubal ligation to LNG-IUS would offer significant savings to the health plan, while maintaining a woman's fertility.