Low cost health insurance to cover pregnancy

TA | June 1, 2007

Q: I am looking for low cost health insurance to cover a pregnancy.

A: Maternity expenses are normally covered by higher priced major medical policies or paid by individuals outside of insurance. Once the pregnancy begins, it is too late to enroll for most health insurance plans because the pregnancy is now a pre-existing medical condition. For individual low cost commercial major medical insurance like Golden Rule Insurance or Celtic Insurance, to be effective in covering a pregnancy, it is necessary to enroll before the pregnancy begins.

While low cost supplemental insurance policies like Basic Health Insurance, Core Health Insurance and Value Med Insurance provide some benefits for maternity in the same manner as any other medical expense, these are not meant to be a primary source of payment. Most women who do not have maternity coverage during their pregnancy work out pre-natal care and delivery arrangements through a community-based program. This is more efficient than trying to enroll in more comprehensive health insurance during the pregnancy. Of course, those who have no health insurance may find that this type of coverage is the only choice that is both affordable and available. In this case, even minimal coverage is better than none at all.

Health insurance works best for covering the cost of unpredictable expenses; it does not make financial sense to purchase individual insurance to cover an expense as predictable as maternity charges. Inclusion of a maternity coverage rider would make the insurance unaffordable for most people. In order to keep insurance financially viable, an insurance company must set a premium at more than the expected benefits payout. If we assume that a typical maternity cost is $8,000, just for discussion, and that most people who shop for maternity insurance plan to try to get pregnant within a few months after buying the insurance, we can do the calculation to see what the expected benefit payment would be on a monthly basis and this would not be am amount we would consider "affordable".  The cost of maternity coverage alone adds about $250 per month to the cost of those plans that provide the benefit and at least 12 months of continuous insurance coverage is necessary before the benefit can be used. Then, even with this benefit in force, the out-of-pocket medical costs from deductibles and co-payments is still substantial.

None of the low cost insurance plans available to individuals at MedSave.com or elsewhere on the Internet cover the bulk normal maternity expenses in a financially efficient manner. In other words, the cost of purchasing maternity coverage is more than the cost of the maternity services that will be provided in almost all cases. This is, of course, the financial nature of insurance that makes it work. This leads us to recommend that the best approach for most women who become pregnant without maternity coverage is to make arrangements to cover maternity expenses outside of insurance - either by negotiating direct payments to the providers or enlisting the help of a community-based health services agency. Fortunately it is easier to find "free" medical care for maternity expenses than any other type of medical care. But if you have a job and earn income, then expenses to pay a proportionate amount for these services. Still, even at the highest level of income, the cost of these services is less than purchasing maternity insurance rider on a standard major medical insurance policy.

Maternity expenses can be covered in any of the following ways:

1. Employer-provided group health insurance always provides maternity coverage as a matter of law. The cost is more reasonable because the cost is spread among more people over a longer period of time.

2. COBRA coverage also covers maternity expenses because it is an extension of the group health coverage described above.

3. State insurance pools include maternity benefits for those who meet the waiting period. The insurance is expensive and is not available if group insurance or COBRA coverage is available.

4. Welfare-based plans offer coverage after most personal income and assets above poverty level are exhausted.

5. Non-insurance plans through non-profit hospitals and community-based care centers provide treatment free or at reduced cost based on income.

We caution women and their families to be extra-ordinarily cautious of health plans marketed on the Internet and in non-traditional methods (like flyers posted on bulletin boards and telephone poles) that seem offer health coverage that is "to good to be true". Under the duress of the need to find maternity coverage women and their families are more likely to fall victim to a health insurance scam.

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