A letter from neli’s CEO on supporting parents
neli's supporting caregivers of all kinds.
There's so much to think about when you're expecting. In fact, there are so many things to think about that you don't even know you should be thinking about as you prepare for motherhood. One topic that often pops up unexpectedly for people and can be a bit of a head-scratcher is understanding how insurance premiums work when you're on maternity leave.
If you're working, chances are you have health insurance through your job. Your employer typically pays part of the insurance premium, which is the regular payment for your insurance. But, the dynamics of health insurance coverage can change when you go on maternity leave.
Depending on your employer's policy and the terms of your insurance plan, there could be variations in how your coverage is managed during this period. In some instances, employers continue to pay their share of the premium, while in other cases, employees might need to cover the entire premium cost themselves.
To avoid surprises, it’s a good idea to chat with your HR department or insurance provider before you start your maternity leave. They can give you the specifics about how your coverage and premiums might change. Every company and insurance policy is unique, so getting this info straight from the source is critical.
Here are a few possible ways your company could handle things:
Continued Employer Contribution: In the most supportive scenarios, some employers continue to pay their portion of your health insurance premiums during maternity leave. This means your payment responsibility remains the same as when you were actively working. This approach is often a part of more comprehensive maternity leave policies.
Partial Contribution or Reduced Benefits: Some employers might choose to pay a portion of your premium during maternity leave but not the full amount they contributed while you were working. This could result in a slight increase in your monthly payments. Alternatively, they might offer reduced coverage during maternity leave, which can also affect costs.
Employee Pays Full Premium: In certain cases, particularly with unpaid maternity leave, you might be responsible for paying the full premium. This situation can lead to a significant increase in your monthly expenses, as you'll be covering both your portion and the part usually paid by your employer.
COBRA Coverage: If your employer does not maintain your insurance benefits during maternity leave, you might be eligible for COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage. COBRA allows you to keep your existing employer-sponsored health insurance for a limited period after leave begins, but you'll have to pay the full premium yourself, which can be quite costly.
Flexible Spending Accounts (FSAs) or Health Savings Accounts (HSAs): Some employers offer options like FSAs or HSAs, which can be used to save money tax-free for medical expenses. If you have these accounts, you might be able to use them to offset increased premium costs during maternity leave.
Transition to a Spouse’s Plan: In situations where the employer doesn’t support insurance coverage during maternity leave, some employees might switch to their spouse's health insurance plan, if available, as a more affordable or comprehensive option.
Variations Depending on Leave Type: The way an employer handles premiums can also depend on the type of leave – whether it's FMLA leave, short-term disability, or another form of leave. The terms can vary significantly based on the categorization of your leave.
First, get the necessary information from your employer or insurance provider about how your premiums will change during maternity leave. Find out if your employer will continue to contribute and how much you'll need to pay.
Tip: Don’t forget to ask about the duration of these changes—how long will you be paying the increased premium?
Once you have the information, calculate the difference between your current premium and the expected increased amount. This will give you the additional monthly cost you need to budget for.
For example, if your current premium is $200 per month, and during maternity leave, it increases to $400, your additional monthly cost is $200.With the increased cost in mind, revisit your monthly budget. Look for areas where you can adjust to accommodate the extra expense. This might include reducing discretionary spending, such as dining out, entertainment, or non-essential shopping. If possible, start making these budget adjustments long before your leave begins. This can help you build up a little cushion and get used to the new spending pattern.
Multiply the additional monthly cost by the number of months you'll be on maternity leave. This gives you the total extra amount you need to cover during your leave. Continuing the example, if your maternity leave is six months, you'll need to budget for an additional $1,200 ($200 extra per month for six months).
Besides premiums, consider other potential healthcare costs like deductibles and co-pays. If you haven’t met your annual deductible, you might face higher out-of-pocket expenses for prenatal care and delivery. Add an estimate of these expenses to your budget. If you’re unsure, review your insurance plan’s summary of benefits or speak with your provider for an estimate.
Pregnancy and early childcare can often come with unexpected costs. Aim to save a little extra each month leading up to your leave to build this fund. Once on maternity leave, keep a close eye on your spending and stay on top of your budget. Tracking your expenses can help you identify if you need to make further adjustments. Be flexible and ready to tweak your budget if circumstances change, like if your leave duration extends or your healthcare needs change.
For more in-depth details on health insurance, the U.S. Department of Labor’s website offers great information about FMLA and health insurance U.S. Department of Labor - FMLA. And if you’re looking for a general understanding of health insurance, Healthcare.gov is a helpful resource Healthcare.gov - Health Coverage.
The neli community has a whole series on employment law, including navigating insurance premiums, FMLA, PWFA, and more. Become a member to access the resources.
Finally, don't hesitate to reach out to friends, family members, or colleagues who have recently gone through maternity leave. Ask them about their experiences with insurance premiums and how they managed changes during their leave.