When you find out you're pregnant, the countdown is on: baby names, baby gear, baby room, baby, baby, baby.
You're probably also getting your finances in order, whether it be opening a 529 college savings plan or purchasing life insurance coverage. But your first step as an expecting parent should be developing the right health insurance strategy. Maternity coverage and your baby-to-be’s care are likely some of the biggest health care expenses you'll have. And those costs can be massive without an adequate in-network policy. If you're uninsured, costs for both vaginal and C-section births can range anywhere from $30,000 to $50,000.
As a soon-to-be proud parent, you’ll want to know what’s covered and not covered in your current coverage, what types of costs and expenses to expect, and whether switching health insurance plans is the right decision.
Health insurance 101
Before we start breaking down how to assess health care 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 Obamacare says about maternity coverage
Former President Barack Obama's signature health care law mandates 10 essential benefits are provided by all plans sold on the federal and state health insurance marketplaces, including maternity care before and after your baby is born. Obamacare health care plans must also cover checkups, routine and emergency care, and hospital care/procedures.
Obamacare 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 or have a pre-existing medical condition. And since pregnancy is considered a pre-existing condition, insurers 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.
Note: These rules and regulations do not apply to short term health plans, which, based on rules passed during the Trump administration, can last up to three years. In fact, short term health insurance generally does not cover maternity care. If you're pregnant and in need of health insurance, shop your state marketplace. Federal open enrollment for 2022 starts Nov. 1. Find out how to enroll in your state. Many low-income-to-middle American families qualify for Obamacare subsidies or Medicaid.
With all this in mind, here's how to find the right health insurance policy when pregnant.
Make in-network care a priority for maternity coverage
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 new parent wants to deal with is if 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 parents expecting a newborn can prevent with some research (here's how to keep medical debt from bankrupting you). According to Haney, expectant parents should try to pick a health insurance plan where your gynecologist, your 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," Haney says. "Since the two often move in opposite directions, they tend to cancel each other out when [you have your baby.] A low-cost plan with a large deductible does not save much money when [you] check into the hospital for labor and delivery."
(Also, people with high deductible plans tend to struggle more with affording care.)
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 health care 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 Obamacare. 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. One in 10 babies deliver 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 and optional 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.
However, there are options. For starters, you can purchase a plan on Healthcare.gov or your state health insurance marketplace. Federal open enrollment is underway from Nov. 1 through Dec. 15, though some state exchanges are closing later.
If you miss your chance to enroll, you need to qualify for special enrollment. Pregnancy doesn't count as a qualifying event, but having a child does, so you can enroll for a new plan after giving birth.
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. You can apply for Medicaid at all times of the year, not just during Obamacare open enrollment. See if you are eligible by checking our state-by-state guide to Medicaid.
Budgeting for baby
Your household expenses go beyond healthcare for new additions to the family; you’ve got to budget for diapers, formula and/or nursing supplies, child care — 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. We have a guide to opening an HSA here.
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.
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 peace of mind when everything around you is changing."