Understanding the Expenses Involved in Gestational Surrogacy

Understanding the Expenses Involved in Gestational Surrogacy

Embarking on the journey of surrogacy is a thrilling yet daunting experience, particularly when it comes to comprehending the financial implications. Hatch, a premier surrogacy agency based in the US, is committed to guiding you at every stage of this journey. This blog post intends to offer an in-depth, transparent breakdown of the various expenses tied to surrogacy. We aim to provide clarity about the potential costs, enabling intended parents to make well-informed decisions throughout their surrogacy experience.

Assessing the cost structure of surrogacy can be one of the most detailed evaluations intended parents ("IP") may undertake. There are numerous agencies across the U.S., each offering its unique pricing framework and range of services. This diversity often makes cost comparisons between agencies extremely challenging. Additionally, some agencies bundle their surrogacy prices with in-house egg donation or IVF services, adding another layer of complexity to the cost comparison process.

This blog is designed to simplify this complex landscape and provide clarity on pricing for gestational carriers ("surrogates" or "GC"). The costs discussed here will focus solely on gestational surrogacy, excluding medical expenses associated with the IVF process or egg donation fees necessary for embryo creation.

Broadly, there are two cost models for IPs requiring surrogate services. The most prevalent is a pay-as-you-go ("PAYGO") model. Under this model, the IPs directly handle all costs levied by the agency and incurred by the surrogate until the child's birth. The surrogacy agency operates as a true "agent," matching the IPs with a surrogate for a predetermined agency fee, assisting with establishing an escrow account into which the IPs deposit funds based on a cost estimate of expected expenses before the journey begins, and managing the journey from match to birth.

The second model is a Fixed Fee structure, a relatively recent innovation in surrogacy supported by a few large-scale agencies, including Hatch, Circle, and ConceiveAbilities. In this model, the agency charges a single, fixed base package price that encompasses many of the costs involved in the surrogacy journey, both fixed and variable. These packages typically offer protection against unforeseen expenses or complications during the journey, which would otherwise incur additional charges under a PAYGO model. In this arrangement, the agency absorbs the financial risk associated with unexpected complications, not the IPs.

Below is a table outlining the average surrogacy costs as of June 2023, organized into fixed, variable, and unexpected costs. Each line item will be discussed in detail further down.

Final Pricing Table

 Download Pricing Table 

Surrogacy Agency Fees

Surrogacy agencies mainly perform three key roles: assessing potential gestational carriers based on medical and social criteria, pairing intended parents with an appropriate surrogate, and overseeing the surrogacy journey until the child's birth and for a few months afterward. In smaller agencies, a single individual often takes on all three roles, while in larger ones, separate teams handle each function. The level of service offered to intended parents and the gestational carrier differs among agencies, and agencies that charge higher fees typically provide more dedicated customer service. Most agencies require a deposit upon enrollment in their program and then collect the balance of their fee once the intended parents have been matched with a surrogate.

Surrogate Base Compensation

Gestational carriers receive a set base compensation fee, which their agency determines. This amount is specified in the legal contract between the intended parents and the gestational carrier, and other potential fees are described later. The compensation is deposited into an escrow account overseen by an independent legal or accounting firm, and disbursement is based on the terms of the legal contract. Generally, the gestational carrier is paid one-eighth of the base compensation upon confirmation of a fetal heartbeat (around week 8), with subsequent payments of one-eighth of the compensation made each month for the duration of the pregnancy. The base compensation for gestational carriers can vary geographically, with rates typically higher in California due to its historically favorable surrogacy laws and high cost of living.

Monthly Allowances and Gifts for Surrogates

In addition to the base compensation, gestational carriers receive monthly allowances during the pregnancy to help cover their expenses. These may include a general "pregnancy allowance" for monthly costs and allowances for specific expenses such as childcare, housekeeping, and maternity clothing. The amounts for these allowances are usually determined by the agency and outlined in the surrogacy contract. Some agencies that provide more personalized service also allow gifts to be given to the gestational carrier and her children.

Surrogate Cycling Allowance (per transfer)

Surrogates are also provided a “cycling” or “transfer” allowance for each medication cycle and transfer they undergo. This compensates them for their time and suffering (transfer medications are not fun!) for going through the process. These are due for every medication cycle and transfer the surrogate goes through.

Escrow Account Fees

All surrogacy journeys have an escrow account to manage the payment of funds. IPs must fund the escrow account before the surrogate can begin medications for an embryo transfer cycle. The escrow pays out not just surrogate compensation and allowances but also health insurance premiums, medical expenses, travel costs, and lost wages.  This account is usually managed by the IP’s legal counsel or an independent accounting firm with surrogacy experience. The escrow charge is a fixed fee per journey.

Surrogate Health and Life Insurance

Surrogate health insurance is devilishly complicated. Some surrogates have health insurance, and some don’t. Some surrogates have health insurance appropriate for pregnancy, and some don’t. Some surrogates with health insurance have surrogate-friendly policies, and others don’t.  Some states apply a lien to surrogate compensation to compensate the insurer for a pregnancy that isn’t their client’s. It’s a confusing mess. Luckily ART Risk, the U.S. leader in surrogacy insurance advisory, can help advise on providing appropriate medical coverage for your surrogate at the lowest possible cost.

A GC with an existing, surrogacy-friendly health insurance plan is the lowest-cost scenario.  Usually, the agency will budget for two years of the IPs paying the premiums (if any), and the plan’s out-of-pocket maximum since 1) Agencies and surrogacy contracts usually require coverage for several months post-birth in case there are any post-birth complications, and 2) Hospital birth expenses tend to hit the annual out-of-pocket maximum.  If the surrogate’s plan isn’t appropriate for surrogacy, or if the GC doesn’t have health insurance, then IPs will need to purchase a plan for the surrogate.  If the match occurs in Nov-Feb, IPs can purchase an Affordable Care Act (“ACA”) exchange plan that will cost, with an out-of-pocket maximum, between $10,000 and $15,000.  If the surrogacy begins outside of those months, the insurance broker will need to place a different type of surrogacy-specific plan, usually with Lloyd’s of London, that can cost upwards of $30,000. Additionally, a state that imposes liens can add $10,000 to $15,000 of insurance costs.  

In short, insurance is complicated and is the most variable expense in a surrogacy journey.  You’ll also need to place a life insurance policy (cost is usually less than $1,000) covering up to $500K or $1MM if the surrogate loses her life during the pregnancy. IPs can also buy their own insurance to compensate them if the surrogate loses her life carrying their child.

Legal Fees

Legal fees related to surrogacy can be broken down into three buckets: surrogacy contract, the establishment of parentage, and court fees. The IP’s attorney is usually the drafting attorney, who will work with your agency to insert into the contract draft the agreed economic terms of the surrogacy arrangement and send the draft to the surrogate’s attorney (the “reviewing” attorney).  IPs are responsible for paying both attorneys' costs, usually a fixed fee for each surrogate/IP match.  Around halfway through the pregnancy, the IP’s attorney will begin the legal paperwork to establish the parentage of the IP(s) according to the laws of the state in which the surrogate resides.  Usually, this involves a courtroom process between the surrogate and IPs, and therefore court costs are also incurred.

Generally, the surrogacy contract and establishment of parentage costs are fixed, while court costs are variable by state. Additional services fertility lawyers provide are drafting of wills and guardianship documents, but these are optional add-ons.  Law firms in the industry range from solo practitioners to larger fertility groups with several lawyers and decades of experience. Some agencies employ lawyers directly and include those costs in their packages.

Surrogate Travel Expenses

In most surrogacy arrangements, the surrogate does not live within easy driving distance of the clinic where the embryo transfer will take place.  Surrogates will usually travel for at least two appointments: for the in-person medical screening and testing once matched and for the embryo transfer.  These trips are generally 1-2 days and involve airfare, hotel, and per diem.  Most agencies also include costs for a partner to travel with the GC for one or both appointments.  In some cases, the doctor will permit the surrogate to have her screening take place locally, which saves on travel costs but will incur additional clinical expenses, minimizing the cost savings.  Cost-conscious IPs can reduce these expenses by matching with a surrogate local to their clinic.

Surrogate Outside Monitoring

As described above, most surrogates will live far from your clinic. Once a surrogate begins her cycle of injectable hormones to prepare for the embryo transfer, the doctor will require regular ultrasounds and bloodwork to ensure her hormone levels are adequate. In the average cycle, a surrogate will visit a monitoring clinic three times, and the typical visit will cost $400-$500, depending on the market.  

Lost Wages

Many GCs have jobs and must take time off for their various obligations to become a surrogate. These obligations range from morning screening appointments, travel for screenings and transfers, doctor-mandated bedrest, and post-partum time. Most surrogacy arrangements provide several weeks of post-partum recovery time and usually double in the case of a c-section. The surrogate’s partner also gets compensated with lost wages for time off of work to accompany the surrogate to her transfer and to support her during her recovery post-birth. If the GC is a homemaker, these wages would be $0, but in that case, usually, the IP will at least have to compensate the surrogate’s partner for lost wages. If the surrogate carries twins, lost wages can be substantially higher since most twin pregnancies require additional appointments and, in most cases, bedrest several weeks before the due date.

Unexpected Costs

While we hope a surrogacy journey progresses as expected with a single embryo transfer resulting in a successful live birth, unfortunately, not all journeys are so simple.  The success rate of a single embryo from a donor source is 70-80% and closer to 50% when working with Intended Mother’s eggs, over the age of 35.  In those latter cases, sometimes multiple embryo transfers may be necessary. Furthermore, miscarriage rates after a positive pregnancy test average about 15%, so IPs may face additional costs to restart a pregnancy. Here we review additional charges in two more common situations facing the IP(s): an additional embryo transfer and a miscarriage.

Additional Transfer

The additional costs in this scenario are generally straightforward. If the IP’s doctor does not disqualify the surrogate – which is uncommon with a 2nd transfer unless there is a clear medical indication that something was amiss during the first cycle – then IPs will incur transfer costs for a second time. These involve 1) An additional cycling allowance, 2) Additional outside monitoring (if necessary), and 3) Additional travel expenses for the second procedure. IPs may also incur additional clinical costs, including a transfer fee paid to the clinic and transfer medications for the surrogate. If the second transfer is unsuccessful, the doctor may recommend another attempt, additional testing to ensure the surrogate is medically qualified, or switching surrogates. The latter two options would incur additional costs on top of a third transfer fee.

Miscarriage

A lost pregnancy after a positive pregnancy test is heartbreaking for everyone involved: the GC, the IP(s), and the doctor.  Miscarriage rates are substantially lower with PGT-A tested embryos, but the risk of pregnancy loss is still present in surrogacy.  If the loss occurs before the detection of a fetal heartbeat, then the additional costs are identical to the Additional Transfer costs described above. However, if the loss occurs after detecting a fetal heartbeat (usually around eight weeks), the surrogate is entitled to her first pregnancy progress payment, generally 1/8th of the total compensation. Upon the restart of pregnancy, the IP would need to refill the escrow account to ensure the total amount of surrogate compensation and allowances are in the account for the surrogacy.

However, a common scenario in the event of a pregnancy loss is 1) The GC electing not to continue with the pregnancy or 2) The doctor disqualifying the surrogate because of the loss.  In that event, IPs would need to rematch with a new surrogate, have her medically screened, and negotiate and sign a new legal contract. Most surrogacy agencies attempt to rematch IPs in this situation as soon as possible, but additional waiting time may be required. The substantial additional costs incurred in a rematch scenario are legal costs since lawyers for both parties will need to be paid to negotiate a new agreement. The clinic may also charge another medical screening fee for the new surrogate.  

Most pregnancy losses happen in the first ten weeks of pregnancy. It is rare, but a fetal termination may be required later in the pregnancy, or a stillbirth may occur. These are heart-wrenching moments and, as an additional misfortune, can incur substantial costs for restarting a pregnancy – sometimes in the tens of thousands of dollars depending on when in the pregnancy they happen. IPs should be financially prepared to shoulder these costs even if they are low probability.

Variable Costs

In the realm of surrogacy, variable costs refer to a collection of potential expenses that could arise during the surrogacy journey. These costs are not fixed and can differ based on a myriad of factors including, but not limited to, the following:

Experienced Surrogate Compensation

All GCs must have had a successful, uncomplicated prior pregnancy. Some IPs decide they would prefer to work with an “experienced” surrogate, meaning a surrogate who has completed a surrogacy journey for another family before, because the surrogate understands the demands and joys of the journey. There is no demonstrable difference in pregnancy success rates between experienced and first-time surrogates – both groups' criteria in the medical screenings are identical. And note that most surrogates available to match with IPs at agencies are first-time surrogates since many experienced surrogates tend to work with the same families on sibling journeys. At all agencies, experienced surrogates earn a premium base compensation for having completed a prior journey, and usually, multiple more if they have completed more than one journey successfully. Check with your agency about the premium earned by experienced surrogates.

Twin Compensation

Carrying twins is substantially more difficult for a surrogate, and in recent years fertility physicians have been discouraging surrogates from undertaking multiple fetus journeys due to the increased risk to them during the pregnancy. Therefore, agencies offer surrogates a premium for carrying “multiples.” This additional compensation is funded in escrow ahead of time if a double embryo transfer is planned. If an embryo unexpectedly splits, resulting in identical twins, IPs are expected to fund the additional amount to escrow once the two heartbeats are detected.

C-Section Compensation

In surrogacy contracts, a standard provision is that a surrogate undergoing a c-section receives additional compensation for undergoing the procedure to compensate her for the further pain and suffering that such a birth entails. In some arrangements, it is known that a c-section will occur in advance (for most GCs whose previous births were c-sections), and in these cases, IPs will fund the amount with escrow. If an unexpected c-section occurs, IPs will be expected to fund this amount to the escrow post-birth since it is contractually owed. Expect about half of surrogacy pregnancies to end in c-sections.

Breast Milk Pumping

Many IPs would like to nourish their children with breastmilk, and for surrogates, there are health benefits to producing and pumping milk as well. At match, many surrogates and IPs generally agree that the surrogate will pump milk, freeze it, and ship it to the parent(s) for some period post-birth. The length of time this arrangement continues is entirely up to the surrogate, but most arrangements last between 3 and 6 months.  IPs pay a weekly fee to the surrogate to compensate her for her time pumping. IPs will also need to pay for shipping the milk from the surrogate to them.

Loss of Reproductive Organs

In some rare cases, the surrogate may lose the use of her reproductive organs during the surrogacy. Surrogacy contracts stipulate an amount of compensation the surrogate is due in that event. IPs can also purchase insurance to protect them from this cost. Policies and health and life insurance options are usually presented to IPs.

Invasive Procedures

In difficult situations, invasive procedures may be needed, primarily associated with the medically necessary termination of the pregnancy. These expenses are variable and tend to involve both medical costs and compensation to the GC for undergoing the procedure. These expenses can be as low as $1,000 or as high as $10,000 but depend highly on the exact situation and where the surrogate resides.

International IP Newborn Insurance

The child born via a surrogacy journey in the U.S. is born as a U.S. citizen due to birthright citizenship. If IPs are residents of another country, they will not have a U.S. health insurance plan on which they can add their child as a dependent.  Once the child is born, all medical costs are the responsibility of IPs, so any complications post-birth could result in substantial hospital costs – particularly if the child requires a stay in the neonatal intensive care unit (NICU). International IPs can purchase a newborn health insurance plan that provides up to 3 months of medical insurance coverage with no deductible to protect them against these potential hospital bills. However, given that most births are uncomplicated, some IPs choose to risk the potential costs and do not buy the plan – there is no requirement to do so.

The cost of singleton newborn insurance is somewhat reasonable. Twin newborn health insurance coverage can range upwards of $100,000 or more if it can be obtained at all. This is because nearly all twins are born prematurely, and many require NICU care. At those costs, and given the potential risks associated with a twin pregnancy to both the GC and the children, international IPs should consider whether twins are the best route to a 2-child family.

We are here to help!

The decision to use a surrogacy agency or private surrogacy is personal, and you may require expert advice to make the most appropriate decision. At Hatch, our team of experts is ready to help you make this crucial decision. Contact Us today for a complimentary consultation and start receiving guidance every step of the way.