The health insurance system for living donors is derived from insurance policies designed to cover accidental death or dismemberment. The system covers only the direct consequences of organ removal, and recoups the costs of related medical services from the transplant recipient's health insurance provider. The system forces transplant programs to differentiate between health services that are, or are not directly attributable to donation and may compromise the pretransplant evaluation, postoperative care and long-term care of living donors. The system is particularly problematic in the United States, where a significant proportion of donors do not have medical insurance. The requirement to assign donor costs to a particular recipient is poorly suited to facilitate advances in living donation such as the use of nondirected donors and living-donor paired exchange programs. We argue that given the current understanding regarding the long-term risks of living donation, the provision of basic medical insurance is a necessity for living donation and that the system of attributing donor costs to the recipient's insurance is inefficient, has the potential to undermine the care of living donors and is a disincentive to the expansion of living donation.