Does a health plan that prohibits coverage of an occupational illness, i.e. one that arises from work for profit including self-employment, have to cover a participant who engages in a for-profit surrogacy?

[Pxhesq]

Specifically looking for cases/authorities that would demonstrate that a health plan participants decision to be a surrogate for profit would not be covered under a health plan that prohibits coverage of occupational illness incurred from work for profit, including self employment.

[GBurns]

I do not have an answer for you but I do not see the problem. IMHO, the health plan prohibits coverage for self-employment related issues and this  surrogacy is being done as such. It is therefore not covered.

[Pxhesq]

On ‎10‎/‎26‎/‎2019 at 4:55 PM, GBurns said:

I do not have an answer for you but I do not see the problem. IMHO, the health plan prohibits coverage for self-employment related issues and this  surrogacy is being done as such. It is therefore not covered.

Broadly speaking I agree with you, but the company has been advised by separate counsel that the modifier "occupational" would not include activities such as surrogacy since such acts are unrelated to the covered individuals actual occupation.

[leevena]

I actual agree with GBurns and the separate counsel.  As GBurns correctly states that if the plan prohibits occupational you should be ok. But as I read your statement about the counsel, it occurred to me that he/she may have a point.  It is possible that the employee could submit, and have paid, a medical expense that was caused by my other job.  It would be near impossible for the employer to know about the true reasons.  

The definition of ineligible expenses should be written very clearly, with wording stating something along the lines of “arising from the course of employment, profit, etc.  Not being able to see the definition for your plan I cannot state with certainty, but if the definition is weak the attorney may have a point.  

[GBurns]

I do not see why the covered individual's actual occupation is relevant. The issue is whether or not surrogacy for profit is excluded because it constitutes self-employment.

If the participant is offering surrogacy services for profit, the participant is generating self-employment income.  which should be reported either on Schedule C or on a 1120/1120S. It is also possible that the participant might be subject to a W-9 from the  surrogacy beneficiaries which would definitely prove self-employment. In either case surrogacy for profit is self-employment.

[leevena]

On 10/26/2019 at 2:56 PM, Pxhesq said:

Specifically looking for cases/authorities that would demonstrate that a health plan participants decision to be a surrogate for profit would not be covered under a health plan that prohibits coverage of occupational illness incurred from work for profit, including self employment.

Did some thinking about your question over the last few days and may have an answer for you.  Some plans will cover this and some will not.  If you want to know about your plan you should read the summary plan description for specific wording about surrogacy expenses.  I would not rely on the prohibition of occ illness clause for this one.  Good luck.

[Luke Bailey]

I'm not sure pregnancy would qualify as an "illness." These cases are few and far between, and I think a lot of employers end up just shrugging their shoulders and allowing coverage of the pregnancy, perhaps in part figuring that the costs of a normal pregnancy and birth pale beside the possible cost if the pregnancy has complications and the plan becomes involved in litigation with the employee. You also have to be concerned about the federal "Pregnancy Discrimination Act."

My suggestion years ago to a client faced with this situation was to add a plan provision that did not deny coverage, but that subrogated the plan to any compensation received by the participant. I believe that recently a case (not mine) upheld that approach.