Today’s post is the fourth in the ‘Cost of Raising Baby’ series. So far, we’ve covered formula, diapers, and clothes. This post will cover the costs of medical care, from the moment you find out you’re pregnant to your child’s first birthday. We’ve actually spent more on medical care than anything else.
Insurance
What you end up paying for medical care is going to depend almost entirely on your health insurance plan (if you have insurance). I’ve heard some people talk about how their delivery cost $250, and I’ve heard some other people talk about how their delivery cost $5,000. I’m not sure what the “average” insurance is like, but it’s probably somewhere between those two figures.
We have health insurance through my employer. There is a $300 deductible per person, after which insurance pays 75% of the medical bill. There is also an out-of-pocket maximum of $2,300 per person. So, say I break my arm and the doctor bill comes to $800. My out of pocket cost is the $300 deductible, plus another $125 (25% of the remaining $500) for a total of $425. If the bill was a lot higher, say $5,000, my out of pocket cost is $2,300 (the maximum amount). I’m assuming that many health insurance plans are similar to this structure.
Our Medical Costs
The total of all our medical costs relating to the pregnancy, childbirth, and first year expenses has come to right around $3,500. Basically all of this represents pregnancy and delivery. With this being our first child, I had no idea what to expect. There are quite a few rounds of bloodwork and doctor visits throughout pregnancy that really add up. Then there were the prescription pre-natal vitamins. However, none of those came anywhere close to the bill for delivery. As expected, that was the largest expense. (For comparison, the total bill would have been around $23,000 without insurance.)
One positive is that since he was born, the out of pocket expenses have been very minimal. Insurance covers 100% of his well-visits and immunizations, which would cost an additional $2,800 without insurance. I’ve heard of other insurance carriers not covering these, which is a scary thought.
How To Soften The Blow
Insurance limits and deductibles work on a calendar year basis. Since our pregnancy started in July, delivery was in April of the following year. So our out of pocket expense was higher than if the entire pregnancy and delivery were in the same calendar year. We not only met our deductible and some additional costs at 25% of the bill for 2010, but we also met our deductible and out of pocket max of the full $2,300 for my wife in 2011 (due to the cost of delivery). Granted you can’t really control when you conceive, but, if you could, it would definately save money to conceive in the early part of the year and deliver that same year. (There are also tax advantages starting the year of birth, such as the additional exemption and child tax credit.)
One thing we were able to take advantage of was the flexible spending plan from my employer. This plan (also known as a Flex Spending Account, or FSA) allows you to set aside a certain amount of money from your paycheck on a pre-tax basis to pay for medical expenses you incur that year. The annual enrollment period for this in the fall, so we knew by then that we were pregnant and would be delivering the following year. I knew we would incur significant medical expenses with having a baby, so I elected to contribute $2,000 of my 2011 pay to my FSA. This worked out wonderfully.
My biweekly paychecks were reduced by around $77 ($2,000 / 26 paychecks), but when the hospital bill arrived in April I received the full $2,000 in funds from my FSA to go towards the bill. So one perk is that the full $2,000 was available to cover my bill in April, but I had the entire year before my payroll deductions came to the $2,000. Effectively, I was able to spread out the hospital bill over the full year rather than paying it all out of pocket at once. As a note, you can contribute up to $5,000 annually to an FSA.
Additionally, because FSA contributions are taken out on a pre-tax basis, my taxable income was $2,000 lower. If you are in the 15% tax bracket this is a $300 savings, and a $500 savings if you are in the 25% tax bracket.
Regarding immunizations once your child arrives, if your insurance provider does not cover these be sure to check with your local health department. Typically, they will provide immunizations at a very affordable price.
A final strategy is to plan in advance. My wife and I knew that we wanted to start our family, and that we wanted her to stay at home with the baby. So, before we started trying to conceive we worked hard (both her and I) to save up enough money to cover all the expenses we would run into with having a baby. I am so glad we did, because it makes things so much easier to deal with. Even if you don’t start saving that early, you still have 9 months after you find out you’re pregnant. You can save a lot of money in 9 months if you really work hard at it.
Your Stories
How much did your childbirth cost and what were some strategies you used to help cover the cost? Share your story in the comments section below.
The Family Finances 