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Common Surrogacy Questions: What is an Insurance “Lien”?


Surrogacy and medical insurance can be a complicated topic. Parties to a surrogacy are confronted with a medical insurance lien or they see language in their contract regarding medical insurance liens and they don’t know what it means. An insurance lien refers to a legal claim that an insurance company may have on any funds or reimbursements related to medical expenses incurred during the surrogacy process.

The insurance company may pay for these expenses when a surrogate undergoes medical treatments or procedures, such as prenatal care, childbirth, or postnatal care. However, suppose the insurance company determines that the policy does not cover the surrogacy arrangement, that there are specific exclusions for surrogacy-related costs, or that they believe they should be reimbursed for expenses at least up to the value that the surrogate received compensation. In that case, the insurance company may assert a lien on any monetary benefits obtained by the surrogate in the surrogacy process. In simple terms, the insurance company will claim that they, not the Carrier, should receive the compensation given to the surrogate by the intended parents to reimburse them for the medical expenses that the insurance company paid out for the medical treatments related to surrogacy.

It’s important to note that the details of insurance liens can vary depending on the insurance policy, the State, and the terms and conditions set by the insurance company. As an example, Nevada’s statutes do not allow insurance liens on a surrogate’s compensation. If you are in a State where the liens are allowed, California as an example, many of these liens can be negotiated, and the insurance company may agree to take a smaller value than capturing the surrogate’s total compensation. If there is a lien, the intended parents must be prepared to place additional funds in escrow to pay for the lien, after it is negotiated, above and beyond the surrogate’s compensation. A surrogate is not going to be willing to be a surrogate for you if she is going to walk away without her compensation (unless the surrogacy started as a non-compensation surrogacy).

If you are considering surrogacy and have questions about insurance liens, it is advisable to consult with a surrogacy insurance specialist, such as ART Risk Solutions, who can provide guidance based on your situation and insurance coverage.

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