Individual Maternity Riders: Deductibles, Waiting Periods

Individual maternity insurance coverage often come packaged with a rider: a long waiting period before you can become pregnant, or a big deductible you must satisfy before you are eligible for benefits. Individual plans with a rider may be the only coverage option for couples who don’t have employer sponsored health plans.  

Insurance companies want to take in more in premium than they pay out to healthcare providers. Group plans cover pregnancy with no rider, waiting period, or deductible because most employees are not planning to get pregnant. They can make money on your co-workers.

However when looking at the individual market insurers have to have a way to make money on your policy. Therefore, they will offer individual maternity policies in one of three ways: when compelled by state law, or with riders that have long waiting periods, or with big deductibles. 

• Know State Laws: Does your state require maternity coverage?
• Define Coverage Holes: How maternity rider deductibles and waiting periods work
• Fill Gaps: with supplemental maternity coverage available in every state

Eighteen states mandate individual and/or small group maternity coverage. Some mandate coverage, while others require only that insurers offer a plan with maternity benefits. Some state maternity mandates apply to individual policies, while others apply only to small group coverage. Know the rules in your state.

Keep in mind these laws are telling the insurance company that if they want to do business in their state, they must offer policies that lose money. If you live in a mandate state, you are in luck. Without a law requiring coverage the remaining option will be an individual rider plan. Individual maternity rider plans allow the insurer to make money on most policies.    

Individual maternity health insurance is your next option if you can't get coverage through an employer. Many employers choose not to offer health insurance because there is a direct cost: insurers require that employers pay a percentage of the premium.

Without a federal law mandating coverage for pregnancy and maternity in the individual market insurers allow adverse selection to drive their benefit offerings. Adverse selection suggests that couples planning a pregnancy cost far more to insure, and are far more likely to buy coverage.

Health insurance companies protect themselves from adverse selection by offering individual maternity riders. Individual Maternity riders are an optional benefit to cover your normal pregnancy, maternity, and delivery. Since insurers know that you plan to use the benefit, they structure the rider in a way that brings in more premium than they pay in benefits: long waiting periods, and large deductibles.

For couples looking to get pregnant very soon, a maternity rider with a one year waiting period doesn't fit. Who wants to wait this long before getting pregnant? Also, you must pay six or twelve months of premium in advance of conception. If you get pregnant before the waiting period is met you prenatal care may not be covered. If conception is delayed you paid extra for the rider with nothing in return.

Plans with a large deductible also means paying more in extra premium than you might ever receive in benefits. In addition to paying the premium you may be left with a large bill to pay yourself after delivery. A plan with a deductible will likely pay little for normal prenatal care, labor and delivery. 

If you get pregnant and experience complications your regular health insurance plan may cover your costs - whether you have a maternity rider or not. Your big exposure relates to your child. If your child is born prematurely, or is seriously ill you insurance plan may not provide coverage, unless you purchased the rider. A few days in a Neonatal Intensive Care Unit (NICU) can leave couples with staggering expenses. 

Supplemental maternity insurance provides a solution that fills holes in many individual maternity insurance plans. There are no waiting periods to satisfy before getting pregnant, and no deductibles to meet before benefits begin. Normal pregnancy is covered, along with complications, and premature birth.