Switching health insurance due to birth of baby

Question

Expecting a baby in a few months and also working through Open Enrollment season.

If I chose a low deductible plan for the beginning of 2024, and then switch to a high deductible plan after baby is born (due to the qualifying event of having a child), will I save money on the costs of the birth? I was told that the 2nd health insurance plan will go into effect on the day the baby is born, so does that mean that all the hospital charges due to labor & delivery will either be included on the 1st or 2nd health insurance plan, depending on whether baby is born at the beginning or end of the day? Obviously I can't time the birth to happen immediately after midnight.

If you change insurance due to birth of a baby as a qualifying event, do the labor and delivery charges get charged to the first insurance plan or the second plan?

Answer 1

Just some rule of thumb advice, I wouldn't do this if the plan is switched on the day of birth. My prayers are such that mom and baby are fine, but you won't know until a few weeks after the baby is born, for sure, if almost no health care is needed.

Things are very binary in that either one will need to spend a lot on the care of mom or the baby or almost nothing. Most of the time it is almost nothing but you never know. There is a reason for frequent new baby visits after birth. And frankly it is to check on the health of the mom and the baby.

Parenting is expensive. Just get through the best you can. This is one instant where the savings is not worth the risk.

Answer 2

The answer to your question depends on your specific insurance company, where you live, and what laws and regulations may be there. In my case, pregnancy was treated as an illness of the mother for insurance purposes, so any services related to the pregnancy and delivery were billed to the mother's plan. Additionally, there was a rule that required any charges in the first 2-4 days of the newborn's life (don't remember which) to be charged to the mother's insurance plan. After that period, the newborn could be charged.

Some other questions to ask your insurance company:

• Will payments made toward your deductible carry over from the low deductible plan to the high deductible plan?
• Do payments made toward the out-of-pocket maximum on the low deductible plan also count toward the out-of-pocket maximum on the high deductible plan?
• Are the same providers available under both plans, and are they considered in-network under both plans?

The mom will almost certainly hit her deductible and probably her out-of-pocket max as a result of the delivery.

I would echo what the other answerer said about enrolling in good health coverage for the first year of your baby's life. The rate of infant complications is very high for that first year compared to follow-on years. Anecdotally, my first kid spent three weeks in the NICU and we were billed $375,000 for his care in total (we only paid the insurance out-of-pocket max).

I would suggest doing the following calculations:

1. What are the premium costs of both plans?

2. What are the premium + deductible costs of both plans?

3. What are the out-of-pocket maximums for both plans?

Answer 3

I have recent personal experience in this regard, but I don't know how generally applicable it is.

When I contacted the insurance company to ask about this in advance, they told me everything that happened at the hospital under the initial admittance would be billed to the first insurance, but that if anything happened after discharge that required a new admittance, that would be on the second insurance.

That turned out not to be true. For most of the line items, that was true, but not all charges ended up under the same general admittance, so they had individual dates that were different from the admission date. There was one charge that, despite the date being on the delivery date, was billed to the second insurance. When questioned, the insurance company confirmed it should be on the second insurance. I might have been able to fight this, but didn't because I expected to hit the deductible on the second insurance even without that charge.

Additionally, some charges were separate for baby. Since baby was never on the first insurance, these were then billed to the second insurance.

The total of the charges that were billed to the second insurance was about equal to the deductible of the second insurance (while the total billed to the first insurance was significantly more).

Something else to consider: when I say things were billed to the first vs second insurance above, that is a convenient lie for the sake of simplicity in explaining which insurance ended up covering which things. In reality, everything was billed to the first insurance policy first, which then reviewed all the charges and rejected the ones it decided were not its responsibility. I then needed to contact the hospital to have those charges re-billed to the second insurance. If the hospital and insurance company are both reasonable and cooperate, this isn't a particularly herculean task, it just takes time and mental energy. But insurance companies are insurance companies, with policies that can be difficult to understand, and may not be consistently applied, so you might end up in a situation where both insurance policies reject a charge, and then it's up to you to argue with them about it, which can take significant time and energy, which you probably don't want to deal with when you are contending with a newborn. Depending on how long it takes to get such an issue resolved, there may be financial implications for you too, with you either needing to pay the bill while the insurance is sorted, or be considered delinquent on the payment.

Personally, I was prepared to pay the full deductible on both insurance policies. Due to the various costs and incentives involved with the two plans, it was a calculated risk with large upside and small downside, but you will need to do the math for your own situation.