Having a baby has been a life-changing, wonderful experience for Mrs. Money and I. Having 2 babies (BabyMoneyFinance and SegundoMoneyFinance) has definitely been a lot of work but we absolutely love having them and being parents. There are a TON of questions and things to think through when having a baby, and there’s also a ton of great resources out there on the interwebs, or even amongst friend groups. 

There are however, also a lot of financial related questions, and as this is a personal finance blog, I’ve shared a few posts in the past on what (financially) it’s like to have a baby, how we prepared, adjusted, and plan for their future. One post that I have not done much on is around health insurance and how having a baby affects it. I personally have heard either really great stories about having a baby (it cost <$200 out-of-pocket!) or nightmare stories (it costs thousands of dollars). Mrs. Money and I have actually had our babies on two different plans – a PPO the first time and a High Deductible the second time. I’d love to share a few thoughts on how we approached doing it and how it worked out.

A quick refresher on health insurance

Unfortunately, health insurance is basically a big game you get to play each year. The game is to minimize how much you’ll pay out of pocket, while also minimizing how much you’ll pay in premiums (either taken out of your paycheck or paid directly to the insurance company). As best you can, it’s wise to predict how much care you’ll need, but realistically that’s an impossible task. Even if you’re super healthy you can still fall ill or get injured. 

Insurance typically works like this:

• You’ll select a plan that either has higher premiums and better coverage, or lower premiums and lower coverage.
• Each plan has a deductible, co-insurance and an out-of-pocket max. 
  • A deductible is what you have to pay before insurance kicks in. So a $500 deductible means you’re guaranteed to spend $500 as you’re using healthcare.
  • After the deductible is met, co-insurance kicks in, and it’s normally a percentage, whether it be 70-30, 80-20, 90-10. That means that insurance will pay 70%, 80%, 90% or whatever their portion is and you’ll be responsible for the remaining 10-30%.
  • This keeps going on like this until you hit your annual out-of-pocket max, whether it be $5,000, $10,000 or more. Once you’ve paid that, insurance will pay it all for the rest of the year. 
  • Each health plan also individually contracts with healthcare providers, meaning the big bill they might send you isn’t what you’ll pay. If the doctor bills $100, insurance might have an agreed up on rate of $80, and then they’d split if with you per your co-insurance. 

Having a baby is complicated because it involves so many services. Firstly, you’ll have your OB/GYN charge. This is typically what’s called a global service, meaning you won’t get nickel and dimed for every little thing – all the services and visits roll up into the package. Secondly, you’ll have the hospital facility charge. When you actually have the baby, the hospital will charge for the room, the nurses, the labs, etc. Thirdly, you’ll have the fees for the newborn – both a facility fee potentially, and a pediatrician visit fee. Each of these scenarios could involve different contracts with your insurance, and you’ll end up getting several bills for them. 

Despite all this, thankfully your doctor, hospital and insurance company will be quite familiar with the billing and payment rules. Your OB/GYN will very early on (in the form of asking you to pay your portion) give you an estimate of how much you’ll pay and your insurance company will pay. Hospitals online should also have estimates too. 

Why we could choose which insurance

Both of our kids were born in the first half of the year, meaning during open enrollment, we knew that for the next year that we’d be having a baby. Open enrollment can vary by company, but for most young professionals I talk to, it happens at the end of the year. Mrs. Money (who works at a school) has it in April. So, when open enrollment for me rolled around, we had the option of moving Mrs. Money to either my plan, or keep her on her own plan. 

We ended up switching insurances for both kids, and it ended up being fine. Apparently the billing person at our OBGYN said it happens all the time and they ended up split billing both insurance companies for the OB global payment that they would be receiving. No charges had occurred yet at the hospital (as having a baby is often a shorter stay) so that wasn’t a worry about switching insurances for us then. 

Why we choose what we choose

Mrs. Money’s plan is interesting because her employer actually pays for her premiums, meaning it’s free to keep her on her plan. However, her plan doesn’t cover as much as my plan did, and it was worth deep diving on.

Thankfully, ‘having a baby’ is always (at least in my experience) an example when you’re looking at your insurance benefits package. You can look at this at anytime, whether by going to your HR portal, or by going to the insurance website and looking up your plan’s information. Sometimes the percentages can be confusing, and as having a baby involves several types of care, having an example is great. We could clearly see that having a baby on my plan would cost around several thousands dollars less compared to Mrs. Money’s. We then compared that to the cost of adding her to my plan vs. paying $0 for her plan and found that it would be quite cheaper to bring her onto my plan.

The last thing we checked out was confirming that her OBGYN and the hospital we wanted to deliver at were all in-network. In-network vs. out-of-network basically means whether or not that provider has a contract with the insurance company. No contract often means higher prices for you to pay, as insurance companies would prefer you get care where they have a relationship. If you’re in a bigger city, this probably won’t be as much of an issue, but if you’re in a smaller city it could be something to consider. It’s a quick phone call to your hospital/doctor or a visit to their website to confirm! 

How it worked out

Ultimately, having a healthy Mamma and a healthy baby is what we were after, and we had both of those each time we welcomed a baby into our family. However, all things equal, I’d rather pay less money for the same service if I could, and with a little planning, research, and verifying, we were able to save several hundred dollars each time we delivered!