In the United States, the federal government provides several forms of subsidies for pregnancy health insurance coverage, which makes having a baby far more affordable for many families.
Like any government program, certain targeted groups enjoy greater assistance levels than others. Sometimes the amount of help you receive depends upon need, while other times it comes down to luck.
Those willing to think creatively often gain the most, especially if they consider leftover expenses in addition to their monthly premiums.
- Help paying for monthly premiums
- Assistance with leftover medical expenses
Subsidies for Pregnancy Health Insurance Premiums
The first and most commonly queried form of federal government subsidy comes in the form of help paying for pregnancy health insurance premiums. Having appropriate prenatal care and coverage for your labor and delivery is critical, and several programs help with paying for the policy.
Before you jump in, remember that you may receive help paying premiums for both individual plans you purchase privately, as well as those provided by employer groups. The form of assistance just has different names.
Individual Premium Subsidies
The premium you pay per month is a function of the plan design you select, along with the amount of financial help you receive.
The federal government provides premium subsidies for medium and low-income families to help them pay for individual health insurance, including those plans covering prenatal care, maternity, and newborn care. The amount of financial assistance depends of course on income, but also the state where you live.
Annual Income Based
You may be able to take advantage of individual level premium subsidies if your family’s annual income falls between 100% and 400% of the Federal Poverty Level (FPL). They come in the form of tax credits that are either advanced or refunded, and cap the percentage of income you must spend on health insurance premiums.
|Federal Poverty Level||Premium/Income|
You apply these supports to the second least expensive silver level plan available in your market place. There are four metal plans (bronze, silver, gold, and platinum) you can choose from that have actuarial values ranging from 60% to 90%.
The silver plan has an actuarial value of 70%. An actuarial value of 70% means that the average policyholder can expect to pay 30% of his or her medical expenses out-of-pocket. Refer to the next section in this article for help paying this leftover amount.
State of Residence Based
Under the Affordable Care Act (ACA), each state may determine whether to expand Medicaid eligibility criteria. Those that chose to expand eligibility extended the income limit to 100% of FPL, which means nobody falls into a “donut hole” gap. Those that chose not to expand may leave some women earning too much to qualify for Medicaid, but too little (under 100% of FPL) to take advantage of individual plans.
In most states, qualifying pregnant women can enroll in Medicaid with no waiting period, and with no monthly premium costs. Each state also extends income-based eligibility for expectant mothers-to-be, but the levels vary. Call your local office for more information.
Group Premium Assistance
Many people are unaware that in the United States, the federal government also provides three forms of assistance paying premiums for group health insurance covering maternity. You cannot take advantage of the financial aid in the individual market if your employer offers an option that is both qualified and affordable, so consider this option first.
- Employer contributions by law must make the remaining cost for each employee affordable per ACA guidelines.
- Employer contributions reduce the amount of taxes paid for group coverage.
- Pretax payroll contributions reduce the amount of taxes you pay for your share of premiums.
Supplemental maternity coverage is normally employee paid; therefore, only point three pertains to this option. Pre-taxing of premiums may affect your benefit; therefore, many applicants choose to pay using after tax contributions.
Subsidies for Non-Covered Pregnancy Expenses
Government subsidies also apply to non-covered pregnancy health insurance expenses. Every plan leaves policyholders with leftover expenses when they utilize the coverage. Cost sharing features such as copayments, coinsurance, and deductibles are the responsibility of the plan member.
If you choose a silver level plan in the individual market the average person should expect to pay 30% of the total annual medical expenses. However, while expecting, utilization is far above average. Prenatal care, labor, and delivery in a hospital are very expensive.
You may find some help paying these extra expenses from income-based cost sharing subsidies, and tax favored treatment of unreimbursed medical expenses.
Cost Sharing Subsidies
Federal government cost sharing subsidies reduce what policyholders of individual healthcare plans must pay out-of-pocket during pregnancy. They improve the actuarial value of the silver level plan for certain low-income families. They make a lower cost silver level plan work more like a higher cost gold or platinum level plan.
|Federal Poverty Level||Actuarial Value|
Put these figures into context by following a simple example. The average cost of a normal C-section delivery with insurance is $16,700. The amount of cost support you may receive varies by your income as a percentage of FPL.
|Actuarial Value||Expected Cost|
Tax Savings Assistance
Both federal and state governments provide cost sharing financial assistance for maternity health insurance in the form of tax savings for un-reimbursed medical expenses. These common leftover expenses are tax deductible, and you can utilize three different vehicles. Each has different pros and cons.
- High Deductible Health Plans – may qualify as a Health Savings Account (HSA), which may allow you to use pretax dollars to cover these extra expenses.
- Use Schedule A to itemize deductions – only expenses exceeding 10% of adjusted gross income provide any savings.
- Use Flexible Spending Accounts – get first dollar savings and avoid paying FICA taxes as well. You must elect to contribute during open enrollment if offered by your employer.