Unfortunately, the United States does not require paid maternity benefits for mothers or fathers. This makes surviving financially much more difficult for parents, as costs often rise when a new family member joins the household.
Many more options for financial help during maternity leave are available than meets the eye. You have to know where to look, prepare in advance, and sometimes it just comes down to luck.
- State and federal forms of financial aid
- Private financial planning options
Government Financial Assistance During Maternity Leave
State and federal government programs do provide limited forms of financial assistance to a small subset of families during maternity leave. Your ability to qualify depends on the state where you work, the size of your employer, and the number of hours you work.
Financial Assistance Options
Options for direct financial assistance are extremely limited. Only five states provide benefits for temporary disabilities. Six states permit workers to collect unemployment once they are available to work again if they voluntarily quit work due to their own medical condition.
This means 45 states do not provide any form of monetary help during maternity leave!
Requesting a maternity leave loan is the one option that could help people in almost every state to obtain emergency funding to cover their bills while away from work. Comfortably repay the personal loan by spreading payments over time once you return to work.
Debt settlement programs work best for families owing more than $10,000 in unsecured obligations (medical bills, credit cards, personal loans) who are experiencing financial hardship. This happens frequently when mom must stop working prior to delivery because of medical complications, or when her baby delivers early and requires extended care in the NICU.
State temporary disability programs provide the primary means of financial aid during maternity leave for women lucky enough to work in one of the five states with a mandated program:
- New Jersey
- New York
- Rhode Island
The state government programs replace a portion of income during the time that mom is unable to work while she recovers from her labor and delivery. The programs may also provide income support if mom needs to stop working prior to delivery because of pregnancy complications.
File a state disability claim if you work one of the five states. Families working in one of the forty-five states without a program will have a more difficult time coping financially.
Collecting unemployment is an option that may provide financial help after maternity leave for certain families. In order the qualify, the person must first be able and available to work. This eliminates applicants who are recovering from childbirth or caring for an infant.
The American Recovery and Reinvestment Act of 2009 provided incentives to the states to “modernize” their systems to expand eligibility to include “compelling family reasons.” Twenty-two states accepted these incentives. Each defines compelling family reasons differently.
Most include the care of a sick family member; only six include an employee’s own disability as qualifying criteria:
File to collect unemployment compensation if you work in one of these six states and you voluntarily left your job. If you must care for a sick infant at home, more states allow you to collect.
Federal government laws do not provide any direct form of financial help during maternity leave. The Family Medical Leave Act (FMLA) provides for job protection rights and continued access to health insurance benefits for qualifying employers and employees. However, the protected time away is unpaid.
State family leave laws extend federal regulations to more people and expand workers’ rights. Currently, only three states provide direct financial assistance during maternity leave:
- New Jersey
- Rhode Island
Each of these states provides paid family leave. Mothers can utilize the benefit to spend time bonding with her baby after she recovers from her labor and delivery. Fathers can take advantage to bond with his newborn baby, or care for his sick spouse before and after delivery.
Financial Planning before Maternity Leave
In order to gain the maximum level of support, your financial planning needs to begin well before your maternity leave. One of the best ways to cope financially is to take advantage of common services associated with your life stage.
Purchasing the appropriate level of health insurance is sound financial planning advice for your maternity leave. When combined with lost income, couples cannot survive large out-of-pocket costs for mom’s labor and delivery in the hospital.
The Affordable Care Act allows couples to purchase or change policy elections while already pregnant. New policies must cover pre-existing conditions with no waiting period. You may be eligible for premium and cost-sharing subsidies based upon your income. However, you can only make changes during an annual open enrollment period. Plan your changes accordingly.
- You may lose your existing health insurance during maternity leave. The loss of health insurance is a qualifying life event, which means you can make plan changes outside of open enrollment.
- Delivering a baby is an expensive medical event. Prepare by upgrading your coverage in advance. Choose a policy with a healthy network, and make certain the closest level four NICU is in-network.
Short-term disability insurance provides maternity leave income when purchased at work, at least, nine months before you give birth. Women in all fifty states can take advantage of this self-help private program. The policy pays a six-week benefit for vaginal delivery and an eight-week benefit for C-section birth.
Many women miss this opportunity by waiting until after conception. If you want to be financially prepared when you miss six to eight weeks of work, you must act before becoming pregnant. Policies contain a nine-month exclusion for normal childbirth.
Flexible spending accounts allow you to utilize pre-tax dollars for unreimbursed medical expenses, and childcare expenses that crop up during maternity leave. Pregnancy, childbirth, and childcare all generate significant amounts of qualifying expenses.
Many couples overlook the impact of this savings option; you avoid three types of taxes: federal income taxes, state income taxes, and FICA taxes.
Once again, you must utilize financial planning to maximize the impact. You can make changes to contributions during your employer’s open enrollment period, or if you encounter a qualifying life event. Becoming pregnant is not a qualifying event, but having a baby is. Make changes to your elections after giving birth, especially if you expect to utilize day care services for your newborn when you return to work.
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