We’ve Got to Go Through It: Navigating the Post-Birth Financial Maze

We've Got to Go Through It - Navigating the Post-Birth Financial Maze

Quick note: This is a guest post from my good friend Kate Barron-Alicante, a mom to two awesome kids and a soon-to-be financial planner.

There is this children’s book that I’ve now read approximately 4,567 times at my kids’ bedtime called We’re Going on a Bear Hunt. The refrain in the book reminds me of becoming a mother:

“We can’t go over it. We can’t go under it. Oh No! We’ve got to go through it.”

A few years ago, after moving across the country and getting married, I settled into a new full-time job. My husband and I knew we wanted to start a family, but we were in our mid-thirties and had watched friends try for years to get pregnant before resorting to IVF. Figuring we wouldn’t be any different, we assumed that it was take us a while too. Maybe a year.

Ha! Within the month we were pregnant.

As exciting as that was, the truth is that we really didn’t know what we were up against. We weren’t prepared for all the systems we would have to navigate and the financial consequences of it all.

From health insurance, to maternity leave, to daycare, we had a lot to learn and no choice but to just “go through it”.

Our big health insurance mistake

To our credit, we weren’t completely in the dark. We did know that there were some financial topics that needed our attention, such as health insurance for prenatal care and delivery.

I wanted to deliver at a birthing center with a midwife but my health insurance only covered hospital births. The birthing center was out of network, and therefore subject to higher deductibles and lower coinsurance.

We ran the numbers and figured out that it would make more sense to pay for the birthing center out of pocket than use our insurance. The final costs would equal out, but the paperwork headache would be eliminated.

We were so on top of it!

Unfortunately, that didn’t last. We made a big mistake after our baby was born that cost us time, money, and stress.

See, even if you have a healthy baby, you’re physically and emotionally beat up from creating, birthing, and now feeding a human being from your body. And even if you’ve adopted an infant, you’re exhausted from round the clock feedings and generally not getting any sleep.

All of the rhythms and roles in your household turn upside down. Weeks pass in a blur. You haven’t changed out of your pajamas and have barely showered.

But in these blurry weeks there is something else you have to attend to. Something we forgot to do.

In the health insurance world, having a baby counts as a qualifying event, which really just means that it’s one of the few reasons you’re allowed to make changes to your health insurance outside of open enrollment.

Typically, you have either a 30-day or 60-day window to add your child to your insurance. If you miss that window, you lose the ability to get your baby covered by health insurance until either the next annual open enrollment period or until you have another qualifying event (like getting married, losing your job, moving, or turning 26 and losing coverage through your parent’s plan). The only exception to this is if you are on CHIP or Medicaid, in which case there are no deadlines to meet.

In our case, we only realized our mistake while speaking to my human resources department. By just a few days, we had missed the window to add our baby to my policy. My newborn was uninsured.

The solution for us was expensive, but at least we had one. We moved everyone over to my husband’s employer’s policy during his open enrollment period, which just happened to be only a month later (lucky timing).

So we got our child covered, but my husband’s premiums were a few hundred dollars more each month than my employer’s plan. So over the next 12 months we paid thousands more in insurance premiums than we would have if we had just reported the birth to my insurance company within the 30-day window.

We managed better with baby #2. With this experience as our guide, we researched the details of our health insurance policy while I was still pregnant, figured out when we would need to report the birth, and just like packing the overnight bag for the birthing center, created a plan in advance for notifying the health insurance company.

Securing maternity leave

Maternity leave was another financial topic that had my attention during pregnancy, and honestly I was nervous about it.

I had only been at my job for a few months when I got pregnant and had to determine what kind of leave, if any, I was eligible for. I found some good news and some bad news.

The good news was that my company had more than 50 employees, and was therefore generally obligated to provide FMLA benefits, which would provide up to 12 weeks of unpaid leave without the risk of losing my job.

The bad news is that I hadn’t been with the company for 12 months yet, so technically they didn’t have to give me any maternity leave, even unpaid.

So I did some sleuthing. I reached out to different female colleagues who had children in recent years. I got the inside scoop on how maternity leave really plays out at my employer.

Armed with that information, my goal was to be proactive and provide as professional and thorough of a plan as possible to my boss. So I bought this Maternity Leave Plan and created a multi-page proposal.

Going through the process of creating this plan forced me to think through lots of details that I might have otherwise overlooked. And it paid off.

When the time came for me to sit down with my supervisor, share my news, and present my plan, I was fully prepared. The plan created a sense of ease for myself and my supervisor, as well as showcasing my professionalism.

In the end, my employer offered me the same leave as I would have had if I had been there more than a year. Success!

The reality of childcare

After our baby was born and maternity leave was over, we confronted the modern US system of childcare.

The burden of childcare costs for today’s parents is, thankfully, getting more attention in the media and public sphere. But it seems like millions of parents are enduring real hardship under this system. The combination of high costs, stagnating wages, and the fact that so many of us are paying back student loans simultaneously can make it hard to get by.

I went back to work after a few months on maternity leave (including our wonderful grandmothers taking turns to come stay home with the baby). In order to do so, we put our baby in a local daycare facility.

It is not the worst, and not the best, daycare in our city. It’s good enough. And we still paid a total of $13,300 that first year that my baby was in daycare. We paid another $9,300 for his older sister in the same daycare that same year. For a point of comparison, annual in-state tuition at the two universities here are $8,300 and $10,300.

In other words, we were paying more for mediocre daycare than we would have for college tuition.

We were able to reduce the cost a little bit by contributing $2,500 to a Dependent Care Flexible Spending Account (DCFSA). That money is contributed tax-free and can be used tax-free for dependent care expenses. (Thankfully, the annual contribution limit has since been raised to $5,000 for 2017 if you are married and file taxes jointly).

Still, over the two years that our children overlapped in daycare we have paid approximately $45,000 out of pocket in childcare costs.

That amount is staggering and it hit us suddenly. We hadn’t been contributing to a savings account for years to cover those costs, so it’s not like the money was readily available. Frankly, we’d been busy starting our careers and trying to make a dent in our own student loan debt.

So we have had to make real financial trade-offs in order to afford these childcare costs:

  • Our debt repayment is a trickle of what we’d like it to be, which does not help our credit
  • Our retirement contributions are subpar
  • Our self-funded professional development investments are curtailed
  • Home projects stall
  • Extracurricular activities for the children are bare bones
  • We do not take cross-country trips to see our grandparents
  • Vacations are out of the question

I’m pretty sure that the generation above us, our parents, doesn’t really understand how much of a burden this has become. Even our local Baby Boomer accountant was stunned to see how much we were paying for childcare.

We’ve got to go through it

Our baby just turned two and our oldest is starting pre-K. Now our attention will slowly shift towards the realm of “big kid school” and what to do in the summers when school is out and Mom and Dad are working.

More systems to learn and navigate as a parent. More costs to hopefully anticipate a little better.

The memories of working through health insurance, figuring out maternity leave, and enduring childcare costs will one day be a distant memory. But right now they are real, fresh, and often frustrating.

I wish we could have anticipated everything, but that is not how life works. There is just so much about being a parent that you cannot anticipate.

Or, as I am reminded during the kids’ bedtime routine:

“We can’t go under it. We can’t go over it. Oh No! We’ve got to go through it.”

GET THE ROAD MAP
Start building a better financial future with the resource I wish I had when I was starting my family. It’s free!
10 Comments... Read them below or add one of your own
  • Cali August 22, 2017

    Thank you! This is a great post.

    I almost missed health insurance enrollment for my 3rd baby! You would think I would have had it figured out by then.

    Also the cost of child care is so outrageous. Of course, the peace of mind knowing that they are daily being cared for and loved is worth every penny otherwise I could never focus at my job. Thankfully our first started Kindergarten right when our third was born so we only had max of 2 in daycare at any time. We are just now really trying got get in the weeds of our finances to figure out what we need to address with the very few extra hundred dollars we have left.

    • Matt Becker August 22, 2017

      Our oldest just started kindergarten too and we’re not really sure yet how much money that actually saves us each month. We no longer have the monthly bill, which is nice, but how much will we end up paying for supplies, field trips, activities, etc? We still don’t know, which makes it hard to plan. But at least that big monthly bill is gone!

      • beth August 28, 2017

        I read somewhere to budget $100 a month for all the fees and extras, and I found out that was about true. That doesn’t take into account school lunch, though…

        • Matt Becker August 28, 2017

          Thanks Beth! That’s basically what we’ve done and hopefully it works out to be reasonable. We’ll see!

  • Syed August 22, 2017

    You would think insurance companies would be a little more lenient in adding a newborn. Not exactly the first thing on new parents mind. But it is a business in the end.

    we recently had our second child, and I altered our financial plan a little bit. For debt payoff and savings I usually try to focus on increasing net worth, but since there are always things to spend on baby, a little more cash flow is nice so I got rid of some smaller debts in order to free up some cash. Not the most ideal financial blueprint but having cash on hand is definitely helpful.

    • Matt Becker August 23, 2017

      I’ve found insurance companies in general to be incredibly un-understanding (is that a word?) of pregnancy and childbirth. It’s a huge frustration for a lot of my clients and it’s one of those things that seems like it should be both easy and a no-brainer to fix.

  • Steve August 24, 2017

    I have been utilizing the dependent care flexible spending account for 8 years, and the limit has always been $5000. I believe the numbers above are mixing the Health Care Flexible spending account and the Dependent Care Flexible spending account.

    Health Care Flexible Spending account in 2017 is $2550 per working parent (and it can be utilized by both parents). The maximum is increased over time against inflation.

    The Dependent Care Flexible Spending account has a family maximum of $5000, and is not indexed with inflation (it has remained at $5000 for the entire 8 years I have utilized it).

    • Matt Becker August 24, 2017

      Thanks for clarifying Steve! And I’m glad you’ve been able to take advantage of this benefit for so long.

  • Laura August 28, 2017

    Great info! I will say, adoption is also a huge insurance and work mess as well. In part because adoptions aren’t usually finalized with all the legal papers and whatnot when you take custody (some int’l adoptions may vary w/ that). So, you have to make sure you have the pile of paperwork showing custody, reminding work and insurers of various laws/ERISA/etc, and then hope your company isn’t self-insured with their own “special” rules. And the adoption agencies want you to prove that you can provide insurance coverage.

    Long story short, CYA no matter how children join your family 🙂

    • Matt Becker August 28, 2017

      Thanks for the input Laura. I’m honestly not very familiar with the process of adoption but I have seen friends go through it and heard some horror stories about the difficulties. I really wish they would make all of this stuff easier.

I’d love to hear from you, please leave a comment