In no way am I pretending to be an expert here in understanding health insurance, or an expert on ways to pay the least amount of money possible for having a baby (I'm hoping that isn't really your goal, because the epidural is worth every penny). However, I can say that I've spent many many hours on researching, talking with health insurance, and talking to others about how to best be prepared financially for having a baby. This means dealing a lot with preparing yourself for what you'll be paying out of pocket for the birth of your baby!
Life is crazy busy, both leading up to having a baby, and I can say honestly the first 3 weeks of the baby's life (since that is where we are right now). Dealing with insurance is the last thing you want to do, but it is really important to handle this as an adult (duh, you're a parent now, so you better be acting like an adult here). The biggest advantage you have for dealing with preparing financially for a baby...is time. That means starting early and buckling down to really dive into this new life. If you're like me, this is the first big medical expense you have as an adult...so you're probably new to this entire process. Here are a few tips I have for those of you wanting to get a head start on being financially ready for this little blessing!
Spend a good chunk of time before the baby is born understanding your policy so you can get a general idea of what your out-of-pocket expenses will be. Find out what your benefit plan year is, which person has the "best" insurance to have a baby under, etc.
Understanding health insurance is often crazy confusing...I'm constantly confused by it, but don't let that intimidate you and ignore what you need to look at here. I started doing this the minute I found out I was pregnant (because I'm a crazy person, but if you read the blog you already know that) but it helped us a lot when it came to financially planning for the future. Hospital bills will be expensive, so the more time you have to budget better. I think we actually started budgeting a little before I found out I was pregnant which is a good idea if you are already trying for a baby.
A couple key things to look at in your policy:
Premium. This is how much you pay per paycheck for the plan you are selecting. When you're selecting high or low deductible plans, consider this cost into your overall coverage.
Deductible. This is the amount you will have to pay out-of-pocket in addition to your premium payments before insurance kicks in.
Out-of Pocket Max. Once you hit your deductible, your plan will pay a certain percent for covered services (coinsurance). The amount they don't pay you will pay out-of-pocket. This amount will add up and once you hit the out-of-pocket max, covered services will be covered 100%.
For example your plan may say they cover maternity at a rate of 70%. That means once you hit your deductible (let's say its $2,500), the insurance will pay 70% and you will pay 30%. Until such time that the amount you've paid at your 30% rate hits your out-of-pcket max (let's say this is $5,000), then insurance will cover everything. So in this scenario you've been paying your premium payments every paycheck, then you paid medical bills that added up to atleast $2,500 out-of-pocket, which is your deductible. Then once you paid your $2,500 your insurance covered everything at a rate of 70%. You pay the remaining 30%. Once you've paid an additional $5,000 in medical bills (after your deductible) you've hit your out-of-pocket max and insurance will now be paying 100%. Also remember that just having insurance means the rate you're paying is less because insurance contracts with the medical provider to get discounted rates.
Remember depending on your plan year, having your baby may fall into two different plan years, so you will have to meet that deductible and out-of-pocket max twice to have your medical bills paid 100%. Your doctor's bills for regular visits may be in one plan year and the actual birth and another, so you may only hit that max in one year. If everything is in one plan year a general rule of thumb is you will hit your out-of-pocket max with this baby. So if you take your premium payments, add them to the deductible and your out-of-pocket max that's probably about what you will pay to have the baby. Ours is about $7,000. out of pocket for Lorelai and since she was born December 21st, we just barely made the plan year for all of our doctors visits and hospital stay. A lot of people have a calendar year as their plan year, but a lot of people don't as well. Don't assume your insurance goes from January 1st to December 31st.
Having a baby is really expensive. If I had no insurance, my bills would be around $15,000-$20,000 and I had a pretty uncomplicated labor and pregnancy.
After the baby is born, I'd suggest calling as early as possible to add your newborn on insurance,that way you don't waste time if there are issues. Plans usually require a newborn be added within the first 30 days of life. 30 days goes by fast if you're communicating back and forth between the hospital, your employer, and insurance. I called to add her on our plan within the first 10 hours of her birth, 22 days later I'm still dealing with all 3 of these parties getting their wires crossed and denying bills for Lorelai.
Before the baby is born, start thinking if you need to change any other benefits at this time, as often you can change other key aspects of your benefits. For example, my employer said I could increase my FSA contributions. I also took this opportunity to increase my life insurance. I also had assumed I would be adding Lorelai on to all my medical benefits, before someone reminded me that a baby doesn't need to be on your dental plan (duh...they have no teeth) or my eye insurance (she hopefully will need glasses at a later date...if any).
Open all your mail promptly, and read everything. This is especially true of the first few weeks/months after the baby is born. I had no idea my insurance was denying bills for Lorelai (because they didn't add her on her birth date but waited until Jan 1) until I received a small little letter from the hospital 3 weeks later saying she wasn't a dependent on my plan. You also want to monitor your bills as they come in and read through to make sure things are accurate. Don't wait too long to question bills, as you'll want to make sure things are correct before paying.
Have contacts written down for your HR or benefits manager, insurance customer service, and easily accessible insurance ID. If it's easy to get to, you're more likely to get to it right away. The last few weeks of pregnancy I created a spreadsheet for all the people we would be calling, such as Kevin's FMLA manager, HR manager, my benefits and FMLA managers, and all the other things I needed to monitor while I was gone (such as suspending my parking payments at work, tuition reimbursement for the classes I'm taking etc.)
If you don't have an FSA or HSA and it's available to you, now is the time to start one. These allow you to put pre-tax dollars into an account and use them to pay medical expenses for you and the baby. By putting these dollars in pre-tax, think of it as getting like 30% off your hospital bills, because it's money used before you pay taxes. It may be a drain at first to lose that money from your take-home, but you're paying the hospital bill eventually, why not get the "discount".
Create a separate account to save money for your bills. It's too easy to commingle funds and spend them on all the fun baby things you are going to be wanting to buy. The last thing you need when you have a newborn is to stress and worry about not being able to pay your hospital bills. Having a fund set up on the side will really help with that. No, you don't know exactly what it's going to cost because lots of things happen in labor, for example a C-section often costs more than vaginal delivery, but do yourself a favor and at least guess at what it will cost. Having some money set aside is much better than no money at all. If you are able, put even more money to the side than you anticipate because right after birth you may not be getting a paycheck (or taking a reduced one) so you may need money for other things those few weeks or months. Take into account any money you've saved in your FSA or HSA because that will go towards paying your hospital bills as well. If you're very close with someone at work who also has the same insurance as you, ask them how much they think they paid to have a baby. It could give you an idea of what it will cost. My OBGYN gave us a cost estimate as well. Don't rely on it, as I believe it was about $1,000-$2,000 short.
If you can pay your hospital bills by credit card, without incurring a transaction fee, and you are able to pay off the credit card right away go for it. It's a great way to get points on your card! However, if you can't pay off your card right away do not do this! The interest on your credit card is outrageous.
If you have trouble paying your bill, contact your hospital proactively and discuss with them setting up a payment plan or negotiating a lower cash rate. It doesn't always work, but hospitals know that lots of these bills get sent to collections and often only get paid a portion of every dollar. Plus, they have to pay the lawyer to go collect them. Remember, you incurred these bills and you do owe them, so don't think you can just ignore it and the bills will go away.
A baby can get by on a lot less than what the baby store will tell you, never spend money on extra baby junk like changing tables when you can get by with something less expensive until you have money saved for your hosptial bills. There are lots of people out there who end up having to file bankruptcy as a result of medical bills. Craigslist is your best friend when it comes to baby things.
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