Monday, April 16, 2012

Using Your HSA to Pay For Labor and Delivery

My husband and I are both independent contractors, which means we are self-employed. One of the big challenges with self-employment is you have to deal with the things employers normally take care of, like taxes and health insurance. When you're shopping for health insurance, you're going to find that premiums skyrocket when you look at plans that cover everything. So you have a choice: you can either pay really high premiums, or you can pay lower premiums and have a higher deductible.

We chose to go with an HDHP (High Deductible Health Plan) with an HSA (Health Savings Account). An HSA is basically an account you contribute to that is much like a regular bank account, only with special rules. You can contribute money to the account, but once it's in, it is in. If you withdraw it for anything other than a medical expense, you get hit with high taxes and fees from the government. If you have an eligible HDHP, you can then open up an HSA and contribute up to $6,250 annually for families, and $3100 for individuals. Now, of course, it would be more fair if families got to multiply the individual contribution by the number of members of the family (say, $12,400 for a family of four), but that's a matter to take up with Congress. 

Back to paying for babies with your HSA. Now, the reason we decided to forego maternity coverage was that the premiums were so much higher: we pay $170 a month with no maternity coverage, but had we opted to get it, it would have been about $600. Now, let's do a little math: 

Let's say I have a baby every 3 years. If I have maternity coverage here's what I would pay:
$600 premium per month x  36 months = $21,600 


$170 premium per month x36 months = $6,120 

The worst part of this equation is that even with maternity coverage, the deductible is so high on the $600 plan, you would still be responsible for basically paying for the entire labor and delivery charge.

But it's scary to think of paying for the whole shebang out of pocket, isn't it? Well, the first thing we had to learn to do was to shop around. We do it for everything else; why aren't we Americans shopping for health care? You would be shocked at how much variance there is, even for something like labor and delivery.

The first thing you can do is to call several doctor's offices, and ask them how much they charge. Explain that you have a High Deductible Plan, and that your insurance won't cover maternity costs. Tell them you'll pay quickly, and ask if they offer a discount. We are being given a 25% discount just for paying within 30 days. Doctors offices love it when you pay them quickly! 

You need to be aware that you'll be responsible for both your doctor/midwife fees, and then the hospital fee.  Call the hospital and ask for the billing department. They will be able to give you a rough estimate as to how much the final fee will be. Again, do not be afraid to ask how much everything will cost. Don't be afraid to ask for discounts either. To show you what a difference this makes let me tell you what we encountered when talking to two local hospitals:

Hospital A: I called the billing department and asked how much they would charge for a normal vaginal birth with no complications. At first I got the run around, with them telling me it would be better to just wait till closer to delivery and sit down with their billing person. Finally, I was given an estimate of over $8,000. That was just the hospital fee. The doctor's fees can be a couple more thousand.

Hospital B: My husband called the billing department and explained that we had an HDHP. How much would it cost for a vaginal birth with no complications? About $5,000. We told them we would love to get out of there in 24 hours. Oh, that would be even less! What if we paid quickly (within 30 days)? Bigger discount! What if we just paid at the counter on our way out? Even less!! 

Now, since I haven't given birth at this hospital yet, I cannot guarantee you that we will end up paying what we were told it would be. I do plan on overcommunicating with the billing department of the hospital before delivery, just to keep everything fresh on everyone's minds.  

So take heart, even when you have a high deductible plan, paying for labor and delivery isn't impossible!

If you have paid cash for your labor and delivery, please leave your story in the comments section below!

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