Children are expensive. Moreover, expenses could mount dramatically when the parent-to-be needs to resort to surrogacy due to reasons like a medical condition or having a partner lacking the complementary reproductive capability. The cost of surrogacy could be especially heavy due to a rising phenomenon: Surrogacy insurance liens.
The American medical insurance system is especially complicated when discussing surrogacy. Tossing the legal concept of “liens” into this maze of regulations only further confuses matters.
Under normal circumstances, if an individual was pregnant and delivered a child, their own insurance policy would help to shoulder the medical expenses. Nevertheless, this support does not cover the full amount—it still leaves deductibles, co-pays, co-insurance, and monthly premiums to be borne by the insured. The struggle intensifies for those who cannot carry their own children and need surrogacy, where insurance policies generally do not provide coverage for another individual’s pregnancy on their behalf. (MRKH affects approximately 1 in 4,500 female newborns).
While some insurance policies expressly exclude surrogacy, others introduce a lien. The lien system means that if the surrogate receives monetary compensation, the insurance company can demand some or all of that amount to reimburse for the medical costs paid on behalf of the surrogate. In this case, intending parents might bear the financial burden, driving up the overall cost of their surrogacy journey. The insurance company for the intended parents reaps a windfall, as it never has to account for an “old-fashioned pregnancy.”
While not commonplace, professionals, like Sarah Paige from ART Risk Financial and Insurance Solutions do see an uptick in insurance companies utilizing surrogacy lien language. She estimates around 400 to 500 surrogate arrangements per year now have imposed liens, effectively forcing parties to embrace this potentially expensive option.
The original purpose of liens was to safeguard medical providers in instances where uninsured victims of accidents or injuries receive settlements – in such cases, the providers have a right to recover their costs. Ralph Tsong, an attorney specialising in assisted reproductive technology and adoption, questions the extent of the leap to apply lien to surrogacy compensation.
Limits also exist in various jurisdictions, such as California Civil Code Section 3040, which restricts recovery by insurance companies to no more than one third of monies due under any agreement or settlement.
One way to combat insurance lien is legislation, as shown by Nevada’s recent law specifically barring insurance plans under state law from excluding coverage for surrogacy pregnancies or applying liens to surrogacy-related compensation. As this trend grows, affected parties are encouraged to explore their options with lawyers specializing in this area.