Pay for Maternity Expenses with Your Health Savings Account
In Colorado, when covered by an individual health insurance plan, normal maternity expenses are not covered unless a maternity rider is purchased. Unfortunately, maternity riders are expensive (often over $200 per month over your normal premium), have long waiting periods (usually at least 12 months), and only pay 50-60% of expenses once all other requirements have been met. Under a typical scenario, when purchasing a maternity rider, you will pay in about $2,400 - $200 (rider) x 12 (waiting period) – before the insurance company pays anything, and then they only pay 50-60% of expenses. If delivery is premature, the insurance company pays nothing, but they keep your premium.
A better approach to starting a family might involve a little pre-planning and using your HSA account to cover the costs of a normal pregnancy. Keep in mind that by Colorado state law, the insurance company will cover complications of pregnancy (subject to the deductible). You are looking to cover the normal costs. The cost of a normal delivery varies by hospital and can run from around $3,500 to $8,000 depending on the facility. The one point you should remember here is that hospitals WILL NEGOTIATE with you. You could very well get a 40-60% discount if you offer to pay cash up front for services. And, you have the perfect vehicle to save that cash with your Health Savings Account. Instead of paying $200 per month to the insurance company for a maternity rider, you pay it to yourself into your HSA and pay for expenses with tax advantged dollars.
In summary, check with several providers to determine a range of costs. Offer to pay cash and see what kind of discount they will give. Save to pay your expenses out of your HSA. Take your tax deduction at the end of the year and get a partial refund on your maternity expenses. If for some reason the pregnancy does not occur, you have cash in your HSA and have not paid all the money to the insurance company.
While the above scenario provides a sensible, practical approach to paying for maternity, many people may not have the time or inclination to do all the legwork necessary to implement the entire program. In that case, it may be prudent to contact Maternity Card, a company that has pre-negotiated rates with networks nationally and can give you significant discounts up front. See below for additional details.