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Must Our Plan Cover a Surrogate’s Pregnancy Expenses?


2014 Small Business Health Care Tax CreditQuestion: Can our company’s major medical plan exclude coverage for the pregnancy and birth-related medical expenses of a participant who acts as a surrogate for someone else?

Answer: Federal agencies haven’t yet issued specific guidance on this issue. But at least two legal hurdles may prohibit enforcement of an exclusion from coverage for the pregnancy and birth-related medical expenses of a participant acting as a surrogate: the Pregnancy Discrimination Act (PDA) and the Affordable Care Act (ACA).


The Equal Employment Opportunity Commission interprets the PDA (which applies to most employers with 15 or more employees) as prohibiting employer-sponsored major medical plans from excluding coverage for pregnancy-related medical conditions.

Furthermore, a PDA-covered employer’s health plan must offer the same terms for coverage of pregnancy, childbirth and related medical conditions as for other medical conditions. Because the PDA mandates that a plan cover pregnancy in the same manner as other medical conditions, it would be difficult for your company to maintain that its plan may exclude pregnancy expenses based on the circumstances of conception or the plans for the child once he or she is born.


Nongrandfathered group health plans that are subject to the ACA’s preventive services mandate must provide “first-dollar” coverage for a wide range of in-network preventive services. In other words, they can’t impose co-payments, co-insurance or other cost-sharing requirements on such services.

These services include prenatal and postnatal care, as well as breastfeeding support, supplies and counseling. Moreover, small-group-market health plans that are nongrandfathered and ineligible for transitional relief must cover maternity and newborn care as one of the ACA’s mandated “essential health benefits.” Thus, your plan may be required to cover a participant’s surrogacy-related medical expenses as preventive services or essential health benefits.

As of this writing, and as you’re likely aware, efforts are underway in Washington to repeal and replace the ACA. But, unless and until such replacement legislation is passed by both houses of Congress and signed by the President, the ACA’s rules remain in place.

Other issues

There are also other practical issues to consider. It may be difficult to enforce a plan’s surrogacy exclusion because the plan administrator may not know the source of the egg or sperm involved in a pregnancy.

In addition, there’s not much difference, at least from a plan’s perspective, between a participant who’s a surrogate and a participant who becomes pregnant and plans to have the child adopted at birth. Further complicating matters, your plan may also be subject to additional state laws and regulations.

Latest developments

For these reasons, your company should consult legal counsel before excluding pregnancy expenses of a participant acting as a surrogate. Also, check with your professional advisors on the latest developments regarding the ACA and other laws or regulations that may affect this area.­

Present_RonIf you have questions about your company's medical plan, please contact Ron Present, Partner and Health Care Industry Group Leader, at or 314.983.1358.


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