OBJECTIVES: LNG-IUS 12 is a novel intrauterine contraceptive system for up to 3 years use with an average in vitro release rate of 12µg of levonorgestrel per day. This study was conducted to estimate the relative cost-effectiveness of LNG-IUS 12 versus short-acting reversible contraception (SARC) in the United States from a third-party payer’s perspective. METHODS: A Markov model was constructed to compare the effectiveness and costs of LNG-IUS 12 and SARC over a 3-year period in a cohort of 1000 women aged 20 to 29 years, the age group in which most unplanned pregnancies occur. SARC methods comprise contraceptives commonly used by this age cohort, including oral contraceptives, the ring, the patch and injections. Primary health states included initial/continued use of contraceptive method and method failure (unplanned pregnancies). The impact of switching methods was also incorporated into the model and tested through sensitivity analysis. Estimates for probabilities of failure and discontinuation, resource utilization and costs were derived from a comprehensive literature review, average wholesale drug prices and the 2012 Medicare Reimbursement Fee Schedule, respectively. Cost and effectiveness metrics for SARC were calculated as weighted averages using distribution of use data for SARC. One-way sensitivity analyses were performed on all key variables. RESULTS: LNG-IUS 12 dominated SARC in women aged 20 to 29 years, resulting in fewer unplanned pregnancies (9.86 vs. 238.75) and lower total costs ($930,187USD vs. $1,528,163USD, a 39% saving) over 3 years. The cost of contraception and number of unplanned pregnancies associated with SARC were key model drivers. Results were insensitive to variation in key input values during one-way sensitivity analyses. CONCLUSIONS: From a third-party payer perspective, LNG-IUS 12 is a more cost-effective contraceptive option than SARC. Additional analysis of discontinuation patterns and planned pregnancy events within future model extensions will help to further reflect real-life utilization pattern.