The optimal private health insurance plan for pregnancy has the lowest total costs.
First, you have the fixed premiums that you pay every month. Then, you add variable medical expenses, including deductibles, copayments, coinsurance, and charges from out-of-network providers.
A Preferred Provider Organization (PPO) and a High Deductible Health Plan (HDH) are two types of private health insurance with unique pros and cons for couples having a baby.
While we all hope for an easy, smooth ride, pregnancy and childbirth often come with bumps in the road. Covering both ends of the spectrum works best for your circumstances.
Is a High-Deductible Plan Better?
A High Deductible Health Plan (HDHP) is the best option for pregnancy when you only have to meet the threshold once. An HDHP typically has lower monthly premiums, but you pay 100% of healthcare costs until you meet this threshold.
- Individual: $1,400
- Family: $2,800
Of course, the lower monthly premiums of an HDHP matter less if the government assists with these expenses under the Affordable Care Act.
HDHP insurance is ideal for pregnancy when your new baby arrives in October, November, or December before the deductible resets. The private Obamacare coverage you purchase on the marketplace begins January 1 and ends December 31.
You might have to satisfy two deductibles when you have your baby outside of these three months. For instance, suppose you conceive in April and deliver your newborn in January.
- $1,400: prenatal care expenses from April through December
- $1,400: labor and delivery charges in January
Private HDHP insurance is optimal for pregnancy when your baby is perfectly healthy, helping you avoid having to fund the doubled family deductible. Even brief confinement in the Neonatal Intensive Care Unit (NICU) for your newborn could double your costs.
Buying supplemental maternity insurance before conception can address this risk. The policies make a cash payment directly to you for each hospital or NICU admission (you and your baby). Plus, income replacement benefits help if you face unpaid maternity leave.
Private HDHP insurance is better for pregnancy when the mom carries a single baby because the odds of the larger family deductible resetting are lower. Twins and triplets are more likely to deliver pre-term and require extended NICU confinement.
For instance, twin babies born prematurely in December might stay in the NICU for thirty days. In this case, you must fund the family deductible again because their confinement continued into January.
Is a PPO Plan Better?
A Preferred Provider Organization (PPO) is best for pregnancy when you can utilize in-network obstetricians, birthing centers, and NICU facilities. A PPO is a contractual arrangement between the insurance company and a network of doctors and hospitals that provides services at reduced rates.
PPO vs. HMO
Contrasting a PPO versus an HMO for pregnancy offers the opportunity to illustrate how childbirth risks affect the ideal insurance decision. You might need care from a specialist if things do not go as planned.
- Perinatologists take care of high-risk pregnancies and fetal abnormalities
- Neonatologists specialize in intensive care for extremely sick infants
A Health Maintenance Organization (HMO) is a medical insurance group that provides health services for a fixed annual fee. The in-network specialists and out-of-network reimbursements are the most critical contrasts between HMOs and PPOs.
- PPO networks are more extensive, but you may have to fund the difference between the out-of-network provider charges and the allowed amount
- HMO groups are smaller, and many do not honor claims from non-participating specialists; the patient funds 100% of the charges
PPO vs. HDHP
Contrasting a PPO versus an HDHP for pregnancy is not a valid comparison because the two private insurance plans are not mutually exclusive. For instance, a PPO can qualify as a High Deductible Health Plan.
However, the PPO versus HDHP question provides an opportunity to illustrate a second critical concept should you need a specialist (Perinatologist or Neonatologist)
The out-of-network deductible for a PPO could be much larger than the in-network counterpart for an HDHP. You could incur much higher out-of-pocket costs if the specialist does not participate in your plan.
HSA vs. PPO
Likewise, contrasting an HSA versus a PPO for pregnancy is not a valid comparison because you can have both simultaneously. An HSA (Health Savings Account) allows you to use pre-tax dollars to pay for qualifying expenses.
However, you must enroll in a qualifying HDHP (which can be a PPO) to stash pre-tax dollars into an HSA with annual contribution limits.
- $3,650 individual 2023
- $7,300 family 2023
Fortunately, if you establish an HSA before incurring a qualifying expense, you can repay yourself later using tax-favored dollars, provided you continue with an HDHP. This hidden feature is handy if you have to fund extra family deductibles.
In conclusion, a PPO plan that qualifies as an HDHP is optimal for pregnancy because having a baby is unpredictable. You fare well regardless of the health of the mom and her newborn.
- The low premiums associated with the HDHP pay off when everyone is perfectly healthy and does not require specialized care
- The smaller allowed charges of the PPO keep unreimbursed expenses in control when using in-network providers
- The tax savings associated with an HSA allow you to mitigate exposure to larger family deductibles that might reset in January