Several government programs offer financial assistance to parents of premature babies. However, most of these programs do not come with evident labels.
Instead, you have to learn obscure rules and apply them to your unique situation. Be creative and open-minded to find multiple ways to save money or tap into benefits.
For example, federal-based Social Security Disability (SSI), the tax code, and FMLA each make a meaningful contribution available only to those who know the ins and outs.
Meanwhile, state-run Medicaid, Paid Family Leave acts and murky guidelines about unemployment compensation work to the advantage of those aware of the odd rules.
State Help for Premature Babies
State government agencies also offer or manage three unique programs that provide financial assistance for parents of premature babies. Again, the people in state agencies describe how these resources can help people in overly broad terms.
However, an inside scoop can help you find valuable benefits you might otherwise overlook, such as Medicaid, Paid Family Leave, and Unemployment Compensation.
Pregnancy Medicaid is a state-managed financial resource that can help out families with premature babies. Although a federal program, each state sets the rules and manages Medicaid for the residents in their jurisdiction.
However, three nameless Medicaid rules apply in most states and can make a big difference in family finances if applicable.
- 3-month retroactive Medicaid coverage could offset expensive NICU bills if you delivered your preemie without health insurance already in force
- Twins and triplets frequently arrive early but also expand Medicaid income eligibility as unborn babies count as family members
- SSI recipients (see above) often automatically qualify for Medicaid coverage
Health insurance subsidies kick in for couples who earn too much to be eligible for Medicaid. The extra support makes it easier to afford the premiums and lowers out-of-pocket costs coming from deductibles, copayments, and coinsurance.
Paid Family Leave
Several state government-sponsored Paid Family Leave programs can provide income support to parents of premature babies. Mom and dad often need to take extended time away from work to care for their infant after discharge from the NICU.
This time away from the job to care for a sick infant can happen immediately after birth. Or, it can continue years into the future as medical issues pop up and require trips to the doctor, and attention at home.
Paid family leave acts make it more affordable for mothers and fathers to take this time off. As of late 2019, eight states have passed laws making this benefit available right now, or into the near future.
|New Jersey||New York||Oregon|
The most significant number of state governments support a legal interpretation that allows parents of premature babies to collect unemployment compensation once their caretaking duties end.
Many mothers and fathers lose their jobs because they must stop working to care for a seriously sick infant. Job termination can occur because they lack FMLA protections, or they expire after 12 weeks.
Many states allow employees to file unemployment claims if they quit or separated from their job for a “compelling family reason” or due to a “good cause.” Care of an immediate family member with a severe medical condition fits both frequently used definitions.
However, you are eligible only after caretaking duties are over. You must meet three universal criteria in effect in all 50 states.
- Physically able to work
- Available for employment
- Actively seeking a new job
Federal Assistance for Premature Babies
The federal government offers three main avenues of financial assistance to the parents of premature babies. Again, the agencies in Washington DC use broad terms to describe who these programs help.
You have to read between the lines to see if SSI, tax grants, and FMLA can offer help dealing with your extra expenses and lost income.
The Family Medical Leave Act is a federal government law that helps parents of premature babies with unpaid job and health insurance protection. Both mom and dad may need to take time off from work to watch over their infants in the NICU or provide care at home after discharge.
FMLA allows qualified employees working for covered employers to take twelve weeks of time off without the fear of losing their job or health insurance. Either event would prove devastating financially while dealing with a preemie with significant health issues.
Social Security Disability
Social Security Disability (SSI) is the primary form of federal government financial help for premature babies. The monthly benefit amount may be small, but it could last for up to 18 years. Therefore, it makes sense to see if you meet the household income and asset requirements and if your infant fits the medical criteria.
A process called deeming determines how much Social Security Disability pays each month for premature babies, and whether the family qualifies. The government agency will consider a portion of the household earnings and assets as available to each person living in the household.
The average monthly amount for an individual is $783 in 2020. However, the level of earnings and assets deemed available for your preemie could reduce the figure – sometimes to zero.
SSI will not count these sources in their calculation.
- Temporary Assistance for Needy Families
- Department of Veterans Affairs’ pension
- General assistance
- Foster care payments for an ineligible child
- Income used to make court-ordered support payments.
- A home that the beneficiary resides in
- One vehicle the family uses for transportation
- Money in pension funds
Premature babies can get Social Security Disability payments up to the age of 18, provided he or she remains unmarried and does not act as a head of household.
Of course, your child must continue to meet the SSI disability definition to continue receiving benefits for as long as 18 years.
However, the federal government does offer free grant money in the form of tax savings, which open-minded family members can leverage to their advantage.
- Has a medically determinable physical or mental impairment or impairments which result in marked and severe functional limitations
- The child, who is not blind, must not be working or earning more than $1,220 a month in 2019
- A child who is blind must not be working or earning more than $2,040
- The impairment(s) has lasted or can be expected to last for a continuous period of at least 12 months or be expected to result in death
After reaching the age of 18, your child can extend benefits further by applying for SSI as an adult. However, the adult qualifiers are different and require you to re-apply.
The Social Security Disability eligibility rules for prematurity include several metrics regarding the health status of your infant(s), including birth weight, failure to thrive, and listed medical conditions.
This SSI low birth weight chart is one element in determining eligibility for your preemie(s) before they reach the age of one-year-old. Any infant born with a weight below 2 pounds 10 ounces (1,200 grams) automatically qualifies regardless of gestational age.
|Gestational Age (Weeks)||Birth Weight Limit (Grams)|
|37 – 40||2,000|
Failure to Thrive
The failure to thrive SSI qualifying criteria apply to preemies up to the attained age of three years old and break down into two main categories.
- Growth failure is less than the third percentile on the appropriate weight-for-length or body-mass-index table for the child’s age
- Developmental delays not more than 2/3 of the level typically expected for the child’s age
Other preemies may meet the SSI qualifications based on common medical conditions that occur when bodily organs do not reach full development before birth.
- Retinopathy of prematurity (ROP)
- Chronic lung disease of infancy (CLD)
- Intraventricular hemorrhage (IVH)
- Necrotizing enterocolitis (NEC)
- Periventricular leukomalacia (PVL)
The federal government does not provide grants for premature babies directly. Federal agencies award grants to universities, state agencies, and non-profit organizations – not to individuals with specific family needs.
The federal money does trickle down to state government agencies and non-profit organizations. In turn, they offer programs to help specified vulnerable populations with a variety of needs – which could include parents of preemies.
Schedule A Deductions
Deducting unreimbursed medical expenses on Schedule A is one government grant opportunity for parent of preemies. Your infant may have spent the first days, weeks, or months of his or her life in a Neonatal Intensive Care Unit (NICU).
The average cost of a NICU stay is about $42,000.
- Cost per day of $3,000
- Length of 14 days
Many people quickly learn the hard way about the holes in their health insurance plan after their infant(s) start life with a lengthy and expensive NICU stay. You could wind up with huge bills after insurance completes their claims.
- Copayments and coinsurance
- Out-of-network balance billing
- Travel, hotel, and parking costs
Fortunately, you can deduct these surprise NICU expenses on your tax return if you itemize. The amounts above 10% of your adjusted gross income (AGI) yield savings. Consult your tax advisor.
Flexible Spending Accounts (FSA) are a second government grant opportunity for parents of preemies. An FSA allows you to use pre-tax payroll contributions to cover the ongoing, predictable medical expenses your growing infant may incur.
Using pre-tax dollars to fund qualifying medical expenses saves money three ways.
- Federal income taxes
- FICA payroll taxes
- State income taxes if applicable
Children born early often have chronic medical conditions or require specialized therapies to help them reach developmental milestones. Many of these treatments are self-paid but eligible for FSA reimbursement.
Invest time learning how an FSA works, as you could see savings for at least 18, or 22 years if your child attends a college program regularly.