Preparing for parenthood? When you’re expecting a baby, it’s easy to focus on the excitement and joy caused by your growing family. But don’t get too caught up in decorating the nursery just yet.
Getting ready for your new arrival involves a number of practical steps to take – and that includes taking a look at things like insurance. Having a baby is a huge medical and financial event, and it pays to be informed about your insurance options.
Understand Your Company’s Parental Benefits
If you work outside the home and intend to return to your job after the birth, you’ll need to understand your company’s parental leave policy. You also need to know what benefits your employer offers new parents.
If you’ve worked for your company for over a year and the company has 50 or more employees, the Family and Medical Leave Act applies to you.
The FMLA dictates that parents (both men and women) are allowed 12 weeks of unpaid family leave after the birth or adoption of a child. Your employer must also pay their usual contribution to your health care costs during your leave.
There are a few exceptions: your employer can deny this leave if you’re in the top 10% of wage earners at the company, and the company can prove that your absence would substantially harm the business.
You’ll also want to check with your company to see if you are covered by short-term disability insurance. Birth mothers are entitled to short-term disability income if the company pays disability benefits in other circumstances.
If your employer doesn’t provide short-term disability insurance, you might be able to obtain independent disability insurance. Most companies do require some time between starting a policy and getting pregnant.
Many employers provide more leave and more pay than that offered by the FMLA, so make sure to check in with HR to get the full scoop. At a minimum, you must notify your employer thirty days before taking time off under FMLA.
Learn the Ins and Outs of Your Medical Insurance
With the passing of the Affordable Care Act, the vast majority health insurance plans cover pregnancy and childbirth. This is true even if you become pregnant before your coverage begins.
You can change plans mid-pregnancy if you don’t like your health insurance plan, but there are usually specific open enrollment periods.
The only exceptions are a few grandfathered individual health plans — plans bought individually, not through an employer. If you are on a grandfathered plan, you’ll have to investigate their maternity benefits to understand your options.
Pregnancy must be treated as any other medical condition, but the specific details of your policy will determine your out-of-pocket expenses.
Make sure you understand your deductible and copayments to estimate your costs. Check with your insurance company to understand your options with prenatal tests, prenatal care, birth settings, labor support, breast feeding support, and neo-natal care.
Now that you understand your medical benefits during pregnancy, you’ll also want to make sure your child is covered after birth.
Having a baby qualifies you for a Special Enrollment Period (SEP). You can enroll or change your health insurance coverage even if it’s outside the open enrollment period. The coverage can be effective as of the baby’s birth date.
Provide for Your Family with Disability Insurance
Now that you have a child that depends on you financially, you might want to consider long-term disability insurance.
Over 25% of Americans will be considered disabled for some period of time before reaching retirement age. That’s why it’s important that those family members earning an income protect their ability to work and earn an income for your family with long-term disability insurance.
Safeguard Your Family with Life Insurance
No one likes to think about worst-case scenarios. If you feel talking about the need for life insurance is too morbid during this happy time, flip your mindset. Remind yourself that taking out the right coverage is to protect your child no matter what happens.
Term life insurance is the most cost-effective option and you’ll want insurance for both parents. Even stay-at-home moms and dads need life insurance – if something happens to a stay-at-home parent, a working parent will need additional childcare support.
Remember to update your will to specify who will serve as the guardian of your child if you and your spouse were to pass away. You can name someone else to handle any assets passed on, or you can establish a trust. A minor is unable to receive a life insurance benefit directly, so it’s important to specify who will manage the benefit.
Even though dealing with insurance can be unpleasant, take the time to understand your options. By understanding your insurance benefits ahead of time, you can set your financial concerns aside and concentrate on the arrival of your new baby.
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