What to expect from open enrollment when you’re expecting
If you expect to welcome a new baby to the family in 2019, cast a critical eye to your health benefits this fall.
Plenty make those decisions on autopilot: Ninety-three percent of employees choose the same benefits each year, and 56 percent spend less than 30 minutes researching their options, according to a report from Aflac.
“Most of the time we don’t think about our health care until we have some medical event,” said Jody Dietel, chief compliance officer for benefits administrator WageWorks.
Yet pregnancy is one of the rare opportunities where you can anticipate a major medical event (in this case, giving birth), and plan around the expenses related to it, she said.
“It’s important that people spend the time to understand their benefits,” Dietel said.
And open enrollment is the time to think about that coverage, whether you’re currently pregnant or plan to be next year. Why? Becoming pregnant typically isn’t a so-called “qualifying life event” that lets you change or enroll in coverage mid-year, said Cheryl Fish-Parcham, director of access initiatives for Families USA, a health-care advocacy group.
(Having a baby is considered a qualifying life event, with coverage retroactive to the date of birth. But that special enrollment is generally limited to obtaining coverage for that child by adding them to your plan or purchasing a new plan exclusively for them — not changing coverage for current family members.)
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For consumers buying a plan on the open market, missing the open enrollment window may mean they can’t get a plan with decent maternity coverage, Fish-Parcham said.
Under the Affordable Care Act, maternity care and childbirth are considered essential health benefits that all qualified plans must cover. But short-term health insurance policies, which are available year-round, don’t fall under ACA regulations — and so may exclude or limit maternity coverage, she said.
Here’s what an expecting parent should look for during open enrollment:
Start by digging into how the plans available to you cover costs related to pregnancy and giving birth.
Comparing some maternity costs across plans may be easier than you might think: Pregnancy and having a baby are among the “common medical events” that the Affordable Care Act requires insurers to detail coverage for in a plan’s Summary of Benefits and Coverage document. (See samples from CMS.gov below, with relevant sections boxed in red.)
Many employers also offer modeling tools to help workers estimate out-of-pocket costs for a particular condition or procedure, said Karen Frost, senior vice president of health strategy and solutions for Alight Solutions. Maternity expenses are a popular health need included there.
But take all those coverage estimates with a grain of salt. Figures are often comparing against national averages, and focus on a “normal delivery,” said Fish-Parcharm. It’s still important to look at plan details such as your coinsurance rates and out-of-pocket maximums for the most you might spend.
Check to make sure your preferred doctors and medical facilities are in-network. (Or covered, period. Plan details can vary widely for using an independent birth center or a midwife, for example, or if you need infertility treatments.)
It’s worth casting a glance at out-of-network coverage, too. Charges from anesthesiologists and neonatal intensive care units are common surprise bills, Fish-Parcharm said.
Weigh those potential maternity expenses in conjunction with coverage for your family’s other medical needs and out-of-pocket costs. And don’t forget that the baby will have his or her own bills, with a deductible to meet, upon arrival.
Once you have a sense of potential out-of-pocket expenses related to pregnancy, take advantage of any tax-advantaged accounts you have access to, to set aside pre-tax dollars to cover those costs, said Dietel of Wage Works.
“You can’t go wrong with contributing to a health savings account,” said Dietel.
An HSA balance rolls over from year-to-year, and accounts have a triple tax advantage. Contributions are either pretax or tax-deductible, typically grow tax-free and can be withdrawn without incurring taxes when used toward qualified medical expenses.
If you have an eligible high-deductible health plan, you can open or fund an HSA at any point during the year.
Health FSAs have a few more strings. They’re use-it-or-lose it within that year, although many employers provide either a grace period of up to 2½ months to spend those funds or allow a carryover of $500 to the next year.
Open enrollment is your one shot decide how much to put aside in a FSA for 2019 — at least, until the baby arrives, which is a qualified life event that would let you reassess your contribution.
Check to see if your employer offers any matching funds or seed money for using an HSA or FSA, said Frost of Alight Solutions. Some companies also offer free cash into such an account for completing wellness activities like getting an annual physical, she said.
Experts advise hold off on loading up on another open-enrollment perk, the dependent care flexible spending account. These accounts let you set aside pre-tax dollars, up to $5,000 per household, for expenses including child care for dependents under age 13.
Like a health FSA, you can fund these accounts during open enrollment for the following year, or when you have a qualifying life event such as the birth of a child. Unlike health FSAs, dependent-care FSAs don’t have a carry over or grace period: Any funds remaining at the end of the calendar year are forfeit.
So it’s best to wait until you have the child to fund that dependent-care FSA, Frost said. That way, you’re not losing money if say, you don’t get pregnant as soon as expected or Grandma offers to watch the baby for free.
“Maybe you don’t 100 percent know what your child care is going to look like until you have the child,” she said.
(Even if this isn’t your first child, beware of maxing out a dependent-care FSA for a year in which you’ll take parental leave. Tax law intends the accounts to be used to cover child-care costs so that parents can work, so you can’t claim expenses incurred while you’re on leave, Dietel said. Odds are good, given the high cost of child care, that you’ll still be able to use those FSA funds, she said, but it’s worth crunching the numbers if you have lucked into inexpensive care, have a generous parental leave or both.)
“I always encourage consumers to use open enrollment to research and shop all their employer’s programs,” said Frost.
There may be other ancillary benefits worth considering. For example, some companies offer something called “vacation-buying plans” during open enrollment, said Frost. That benefit lets employees purchase extra days of paid vacation time, which are taken out of their paycheck pre-tax over the course of the next year.
Taking advantage, if offered, could help you stretch your paid parental leave, she said.
While you have the employee handbook out, take a look at parental leave policies and other perks. Many companies also offer benefits such as maternity management programs that provide extra support for pregnant workers, or access to lactation consultants, Frost said.