What’s the best health insurance for my surrogate mother?

“We’re looking at surrogate mothers in the United States, but the entire issue of health insurance is bewildering. The surrogate has insurance, but I’m told we need to buy a policy that will support the surrogacy program. Is this even necessary? What are the options?”
– Daniel

Hello Daniel…

I strongly urge all couples to get health insurance for their surrogate. In most cases it’s a legal requirement. In many other cases it’s a personal requirement of the surrogate herself. She will definitely need to know you will take generous care of all the prenatal requirements, and she won’t get stuck with any of the medical bills.

For a more updated discussion about US insurance for surrogate mothers, check out this article in the Surrogacy Guide.

Now to be clear… what I’m talking about here is the health care for the surrogate, not the insurance for the newborn (which is another, very complicated story). This is the insurance that will cover the prenatal care, office visits, ultrasound exams, and the delivery (including any complications). There’s also a complete discussion about finances and managing your costs in the Surrogacy Cost Guide.

If you’re from overseas, health insurance will seem ridiculously complicated in the United States. I generally advise couples to buy insurance for their surrogate though the ObamaCare exchange — which is the most affordable option and guarantees coverage for pregnancy and maternity.

An ObamaCare policy will likely cost about $600/month if your surrogate is otherwise young and healthy. ObamaCare policies take effect on January 1 after your enrollment.

However ObamaCare polices only allow enrollment in November. So to ensure you get good coverage, you should have your surrogate ready to sign up for insurance in November. For surrogacy agencies, November is like April for Tax Attorneys — it’s the busiest time of the year when all couples try to squeak under the government’s official cut-off date.

If you don’t buy insurance during open enrollment, your option is to buy insurance on the open market (not within the ObamaCare marketplace). Such a “Private Insurance” policy can cost $1000/month or more, can start whenever you make the first payment, and typically has a term of one full year. Private policies will have annual deductibles and “out of pocket” co-payments; so even in if you have Private Insurance, plan to spend the first $5000 of any costs from your own pocket.

Also remember, that deductibles and co-payments are renewed each year… so if your pregnancy goes over the one-year anniversary of your policy, then you will need to pay the deductible/co-payment again that year.

A third type of policy is called “Gap Insurance” because they are specifically designed to provide coverage for a few months until you can enroll in an ObamaCare policy. These policies are paid month-to-month, and you can quit at any time. A Gap Insurance plan is more expensive than a Private policy, but you have the flexibility to cancel it when your ObamaCare plan begins.

Note the rather complicated math needed here:
• If you’re surrogate gets pregnant in November, then you need Gap insurance for 1 or 2 months (no problem).
• If your surrogate gets pregnant in August, then you need Gap insurance for 5 months.
• If your surrogate gets pregnant in May, then you may need Gap insurance throughout the entire pregnancy (at which point it’s cheaper to buy a Private insurance policy).

In short, the month when your surrogate gets pregnant will strongly influence the total cost of your insurance bill. If you can get pregnant late in the year, you can save a lot of money. The only way to know what makes the best financial sense is to do the math. Fortunately there are consultancies that specialize in this and you can pay one to do this work for you.

One alternative if you are handling your own journey… if your surrogate gets pregnant late in the year (October or November), you may decide to pay cash for the first few months of prenatal care and then sign your surrogate for ObamaCare in November. That’s a possibility if you plan the delivery (which is the biggest medical expense) for the following year, after she is enrolled in the next open enrollment period.

Generally, if you are planning to get pregnant late in the year, paying for prenatal care out of pocket may be feasible (although not necessarily advisable). In that case you would be facing just a few months of office visits, and the likelihood of a premature delivery before November enrollment is really unlikely. But you absolutely want to make sure you buy insurance comfortably before the pregnancy reaches it’s 25th week.

Prenatal care averages about $2,000 to $3,000 for a normal pregnancy in the U.S. That includes monthly office visits, prenatal vitamins, and an occasional ultrasound exam. There are always extra out-of-pocket expenses, like travel or childcare if your surrogate requires bed-rest.

On average, the delivery cost is between $4,000 and $10,000 for a natural, vaginal delivery without complications (according to Fair Health). That is the cost just for the delivery — care for the newborn is extra, but should be covered by the Parent’s own insurance. Add in prenatal, delivery-related and post-partum healthcare, and you’re looking at an $8,802 tab, according to a Thomson Healthcare study for March of Dimes. Premature birth occurs in about 1 of 5 IVF pregnancies, and that can increase the cost of your delivery by nearly 11 times (than for newborns without complications).

U.S. Health insurance has 3 components.
Monthly premiums, which is the cost of the policy in general. This will depend on the personal situation of your surrogate.

Deductible and Co-payments, this is the amount you pay from your pocket before your insurance payments begin (or that you must pay in addition to the insurance payments).

Out of Pocket Maximum, this is the total limit on your out of pocket expenses from the deductible and all co-payments.

Our typical budget assumes $600 month for your premiums, with an Out of Pocket Maximum of about $5,000 USD. This is the typical policy cost for a woman in her 30’s/40s with at least one child in the Midwestern United States. The exact amount may vary somewhat.

I hope this is helpful,
— Bill