Preparing for Parenthood: Health Insurance

The largest expense in having a baby is by and large the delivery of the baby. The costs of a baby delivery in the United States now range anywhere from $3,000 to $30,000 depending on where you live. By understanding your health insurance you are starting down the right path to being financially prepared for that little munchkin.

Types of Health Care Plans

Every health insurance plan now has maternity coverage but there are so many other variables that will affect how much you end up paying out of your own pocket. There are seven different types of health care plans: (For more, see: 5 Budgeting Steps for Young Families to Follow.)

HMO

Provides a network of providers that you can work with. Unfortunately, these networks can be quite selective and you will need to make sure you doctor is included in the network for your health insurance to cover any expense associated with that doctor or even hospital. You will also need a referral from your primary care physician to see a specialist.

PPO

You will have more flexibility with the doctors covered under your insurance than an HMO, but you still will incur higher costs if you see a doctor that is not a preferred provider.

HDHP

This plan is going to have the structure of one of the two above but with a high deductible, such as $5,000 for individuals and $10,000 for the family. This means that you will have to pay up to that deductible amount and then the insurance provider will cover the rest. Usually, these health plans come with a Health Savings Account which allows you to set aside pretax money into it, usually through your paycheck.

EPO

You have some freedom to see whatever doctor you choose and you don’t have to have a referral. Like a PPO plan, you will still have to pay for full costs of any provider outside your network. You will have a lower premium than the PPO though.

POS

With a POS you will have a primary care doctor who coordinates and refers your care to certain specialists within your network and that he/she works with. You will have more freedom than an HMO but will still be constricted by those that your primary care physician works with.

Catastrophic Plan

Mostly designed for those under 30 though there are qualifications that allow others to purchase it. Catastrophic plans will come with a lower premium but a much higher deductible than any of the other plans. Another benefit is free preventative care since I am guessing not that many people go to the doctor when they are not sick.

Each of these policies requires you to pay a premium. Each of them may also have a deductible or the amount you must pay before your insurer starts paying. There are also co-payments for certain services, such as doctor appointments and pharmacy costs, that may pertain to your plan. Co-payments are a set payment. You usually pay around $15-$30 at each visit or for some pharmaceutical drugs.

By educating yourself about your health insurance, you will be in great position to welcome home your cute little munchkin. (For more, see: 5 Easy Tax Tips for New Families.)