Updated Oct. 11, 2017
So you and your partner have just found out that you’re pregnant, and congratulations are in order. That gives you nine months to come up with baby names, have your baby shower, decorate the nursery and start filling out your gift registry before his or her arrival.On top of all that, expecting parents shouldn’t sit idle during all three trimesters without developing the right health insurance strategy. Mom’s maternity coverage and your newborn-to-be’s care are some of the biggest healthcare expenses today. And those costs can be out of control without an adequate in-network policy. Uninsured, vaginal and C-section births can range anywhere from $30,000 to $50,000.
As soon-to-be proud parents, you’ll want to know what’s covered and not covered in your current coverage, what types of costs and expenses to expect, and if switching health insurance plans is the right decision.
Health Insurance 101
Before we start breaking down how to assess healthcare plans, it's important to review some common health insurance terms. That'll make it easier to comparison-shop or better understand a healthcare plan you may have already.
- Health insurance premiums: The monthly fee you pay your insurance provider for coverage
- Deductible: The amount you pay for services before your health insurance kicks in; for example, if your deductible is $2,000, you’ll need to reach that amount out of pocket before your insurance takes over
- Copay: Fixed amount fee paid by a patient during an in-network doctor’s visit
- Coinsurance: The percentage of costs paid by a patient for covered in-network services before their health insurance takes over payments (in many cases when a major, costlier procedure is involved)
- Out-of-pocket expenses: Medical care costs not covered by your insurance that you need to pay in full yourself
What the ACA says about maternity coverage
The Affordable Care Act (ACA) mandates 10 essential benefits are provided by all plans in the health insurance marketplace, including maternity care before and after your baby is born. According to the ACA, health insurance must also cover checkups, routine and emergency care and hospital care/procedures.
It also guarantees what a health insurance provider can’t do. They can’t impose a cap on in-network coverage or cancel your insurance policy after they’ve reached a certain limit. You can’t be denied care or charged more money if you’re sick, have a pre-existing medical condition, or if you’re female. And since pregnancy is considered a pre-existing condition, insurers, as per ACA regulations, can’t deny you coverage. They also can’t force you to pay endless out-of-pocket costs. (That’s what having a deductible and a maximum out-of-pocket limit is for.)
With all this in mind, here's how to find the right health insurance policy when pregnant.
Make in-network care a priority.
Regardless of what type of plan you have (e.g., PPO or HMO), you will always have the lowest costs when you get care in your plan’s network. That’s because your health insurance company has pre-negotiated preferred rates with network providers.
To conserve costs and minimize your out-of-pocket maternity expenses, get better acquainted with your network. This is worth planning out with your OB/GYN. The last thing any couple wants is to discover is that their insurance provider billed a maternity procedure (no matter how major or minor) as an out-of-network, and thus, out-of-pocket, procedure.
"Expectant parents should look beyond the obvious when choosing a health insurance policy, and focus on limiting their exposure to balance billing charges from out-of-network providers instead," says medical finance expert Kevin Haney. "It is important to verify that all possible providers participate in-network; parents should not assume that every medical professional working in a hospital falls under the same umbrella. Many hospitals contract with other providers that may or may not participate in-network with a given plan."
When this happens, many patients may inadvertently receive care from an out-of-network provider wrongly assuming it’s in network. The resulting full, out-of-pocket charge is commonly called a surprise medical bill, which couples expecting a newborn can prevent with some research. According to Haney, expectant parents should try to pick a health insurance plan where the mom’s gynecologist, her hospital of choice, the anesthesiologist group, and the closest NICU unit all participate as in-network providers.
Look closely at the laws in your state of residence. According to the Kaiser Family Foundation, New York and several other states have limited health providers’ ability to charge surprise medical bills to patients who unintentionally receive care out of their health network.
Consider a higher premium over a high deductible
"The obvious factors many people consider are premium costs and plan deductibles," he says. "Since the two often move in opposite directions, they tend to cancel each other out when mom has her baby. A low-cost plan with a large deductible does not save much money when mom checks into the hospital for labor and delivery."
A basic rule of thumb in this case for expectant parents is to choose a health insurance policy with a higher premium and lower deductible.
Although your monthly insurance premiums may be higher, you’ll hit your deductible more quickly (since delivery is a major healthcare event), saving more money in the long run when your insurer takes over paying for service.
Get an estimate on how much the birth of your baby will cost
One easy way to understand the cost of having a baby under a health insurance plan is to review the plan’s Summary of Benefits & Coverage (SBC) document. The SBC is required for each plan under the ACA. Request this document from the insurer (typically found on the website). Toward the back of the document, the costs of having a baby with the plan will be spelled out as a coverage example (see an example here).
Those costs can be out of control without an adequate in-network policy. Plus, emergency procedures need to be taken into account; with one in 10 babies delivering preterm, according to the Centers for Disease Control and Prevention, neonatal intensive care for newborns can produce "astronomical" costs without the right in-network plan in place, Haney says.
Maternity coverage should be comprehensive across the entire pregnancy — not just when baby is born. Ask questions of your current insurer (or, if shopping around, your future insurer) about their maternity coverage. When selecting a plan, make sure you’re comfortable with the plan’s network of providers and consider the following when planning out your healthcare budget.
- Prenatal services, health screenings, lab work, ultrasounds and birthing classes across all three trimesters
- Medical conditions that could complicate the pregnancy
- High-risk pregnancy factors, like unplanned obstetrical surgery, epidurals, premature births, incubation or extended stays in the neonatal unit, NICU or maternity ward
- Pediatric and/or routine and emergency care after baby is born, plus necessary immunizations, vaccinations and checkups in the early months and years of baby’s life, and common baby illnesses
Also find out if elective procedures like the following are included in the insurance plan:
Are gender-specific procedures, like circumcision, covered? Is nursery care covered?
Does the policy take into account the cost of having a baby in a nontraditional, alternative birthing center, or using the services of a midwife? These options may be up to 60% less expensive ... but also not covered by your insurance policy.
Examine your options
Shopping around for a health insurance policy when you’re uninsured (or your employer doesn’t sponsor a policy) and you’re pregnant can introduce lots of stress and make it seem like your options are limited.
One is to enroll in the Obamacare public health marketplace for coverage. Even if you’re not pregnant during the annual open enrollment period (happening Nov. 1 through Dec. 15 this year, although some states have longer deadlines. You can find a guide to 2018 Obamacare open enrollment here.), pregnancy qualifies women for a special enrollment period with a 60-day window.
You can also sign up for an off-exchange plan. While not sponsored under Obamacare, an off-exchange health insurance policy still covers the same essential benefits and protections, including for pregnancy and maternity care.
According to Healthcare.gov, Medicaid and the Children’s Health Insurance Program (CHIP) are other public health options covering pregnant women who earn below particular income levels. One of the best things about Medicaid is that you can apply at all times of the year, not just during marketplace open enrollment.
Budgeting for baby
Your household expenses go beyond healthcare for new additions to the family; you’ve got to budget for baby clothes, toys, furniture — even your own transportation (such as upgrading to a larger family car). But health insurance costs need to be part of the big picture. Try some of these tips to save on costs:
- Open an HSA or FSA. A health savings or flexible spending account allows you to save pre-tax dollars for dedicated medical expenses for the entire family that run out of pocket. While FSAs are employer-sponsored only, HSAs are available both through employers and to individual consumers, but only for depositing money toward out-of-pocket expenses for high deductible plans. In 2018, the annual HSA contribution limits for individuals with a high-deductible plan will be $3,450, while families with an high-deductible plan can contribute up to $6,900
- Look into more affordable options. You may not even need to switch insurance providers, just policies. Downgrading from a PPO to an HMO may provide more limited network availability — so check first before making a move — but premium and copay expenses may be cheaper.
- Rent or subscribe. Subscribing to Amazon affiliates like Amazon Family can help you save money on baby stuff like diapers when buying them in bulk. Use the extra, freed up cash towards investing in your FSA, or to offset your associated healthcare expenses.
- Compare costs. Whether it’s choosing between generic or name brand products, deciding on new or used baby items, or comparing health insurance policies, always compare the cost savings to benefits in everything your family buys. The savings can be significant.
Ultimately, opening up more cash flow to cover any out-of-pocket costs (surprise or planned) gives couples more leverage when shopping for the right health insurance policy and maternity coverage — and expecting a new member of the family.
"That first year of parenthood brings with it many health unknowns and unexpected costs," says Rebecca Schreiber, a Certified Financial Planner. "Setting aside enough cash to cover the out-of-pocket maximum before the baby is born brings a lot of piece of mind when everything around you is changing."