Life as a mom


FIRST COMES LOVE, THEN COMES MARRIAGE, THEN COMES CHOOSING A HEALTHCARE PLAN….

My sister’s employer recently presented them with new health insurance choices.  They can pick from a Traditional Plan (PPO) or a High Deductible Healthcare Plan (HDHP) with an Health Savings Account (HSA) savings account.

I’m the “big sister” and as such, a bossy know-it-all – so of course she asked me for some advice on which plan makes better financial sense for her.  I’m kinda at a loss here.  Very complicated stuff even when you do try to plan ahead.

She getting married in July, will add her husband to her plan and they hope to start a family soon after they tie the knot.  In regards to healthcare, the question for her is, “WHAT WILL THE MATERNITY COSTS BE” under each plan?

“Which plan will cover more pregnancy related costs?”  The Traditional Plan or the HDHP with HSA?

It took her while to flush out the true costs for either plan.  Insurers and provider’s don’t make it easy for you gauge what is covered, what is considered “preventative care” (what the IRS will allow as Preventative Care under HSA’s – not necessarily what YOUR plan will cover as preventative care), what is subject to deductibles…

After much back and forth with her “Policy Rep” she finally felt confident enough to do a cost comparison of the two plans.  If she chooses get pregnant under a HDHP with an HSA , she COULD pay less than the PPO plan, it all comes down to how much risk you are comfortable with (and a little bit of gambling).

Imagine you have “Employee + Spouse coverage” and plan to have baby.  Your “POLICY YEAR” runs January 1st to December 31st (why that matters later) and you get pregnant in February, have a pregnancy with NO complications and deliver with NO complications in November:

This is quick look at cost she had to consider (only in regard to maternity coverage) with that hypothetical in mind.

Choice #1 – TRADITIONAL PLAN COSTS (PPO) – 100% Coverage after Deductible is Met

Yearly Premiums (deducted from paycheck pre-tax) – $5460

Co-Pays (Prenatal exams – $20) (Ultrasound – ($20) – $40

Deductible (Delivery is considered an “In-Network Hospitalization”  and subject to meeting deductible) – $500

Co-Insurance  – $0

COST OF UNCOMPLICATED PREGNANCY= $6000

Choice #2 – HDHP with HSA – 100% Coverage after Deductible is Met

Yearly Premiums – $3016

Co-Pays – $0 (but all “non-preventative” care is subject to deductible)

Deductible – $4000 (Paid from tax-favored  HSA account – Employer contributes $1500 a year to HSA)

Co-Insurance – $0

COST OF UNCOMPLICATED PREGNANCY =($7015-$1500 employer HSA contribution) $5516

You would save $484 with the High Deductible Plan in the above scenario.  So is it a no-brainer?  The HSA all the way?

But what if you get pregnant in JUNE instead of JANUARY? The pregnancy now spans “TWO POLICY YEARS” and therefore you now have to meet the deductible twice before any coverage is paid out.   It’s very likely that with a pregnancy with no complications you won’t meet the full deductible for the pregnancy during POLICY YEAR ONE, maybe only paying out from the HSA account for an ultrasound or a few tests.  But that’s the GAMBLE.

So the choice to get pregnant money-wise becomes:

1.) Prepare for a “TWO YEAR POLICY” pregnancy but hope for the best.

HDHP Plan – AS MUCH AS $8016 -  AS LITTLE AS $5516

OR

2.) Know the costs beforehand but pay more.

Traditional Plan – $6000

Which would you choose?  I’m pretty risk-adverse so I’d probably pick #2 – the PPO. Ironically, I’ve had three uncomplicated pregnancies, three uncomplicated deliveries and somehow completely unintended on our part THEY ALL spanned  only ONE POLICY YEAR.  We have an HMO so it would have been a  moot point – but if we had the same choice we would have saved some money by going with option #1!

If you have an HDHP and had a baby did you actively try for that “ONE YEAR POLICY” window?  That’s a lot pressure the get pregnant in very specific timeframe!

Is maternity care/pregnancy the only “health issue” treated with such a risk-reward scenario for the insuree?

If you find yourself with a similar choice you may want to read the “Kaiser Foundation” report on Maternity Care and Consumer-Driven Health Plans. (Long but VERY informative.)

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“If only one spouse works do I still qualify for the full $800 “Making Work Pay Credit”?

The answer, in MY CASE is yes, because:

We are Married filing Jointly.  Single filers max out at $400.

We make less than $150,000.  Credit starts phasing out over this amount for Married Joint filers.

My husband held only one job in the 2009 tax year.   Having more than one job may result in the credit being withheld  from both paychecks.

Because this a CREDIT on the amount of tax you owe, it may even give you refund even if you do not owe federal taxes.

I’m having a hard time wrapping my head around the fact that we qualify for the full $800.  I mean I’m not complaining, just a little shocked.  This is the first cash value I’ve ever received for being a stay at home parent.

But it doesn’t even matter if we have kids or not.  We would still qualify if we were childless and I did not work  – because we are married.

I mean highly doubt those who are legality entitled to get married would choose to do so for $400.  Especially considering there is no longer a Marriage-Tax penalty.

But I’m surprised this hasn’t opened a bigger can of worms in the endless tax fairness debate…

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I thought I was a goner.

Maybe they had read my gloating and decided we were up to no good.  Or maybe they had gotten wind of my plan to deny them a free loan next year and had decided to take their revenge…

Was it the dreaded AUDIT?

NOPE!  I had made a mistake on my taxes.  They were writing to inform us that they OWED US more money.   After I filed my taxes I had noticed I made a mistake when claiming the “Making Work Pay Credit”.

One of the questions via Turbo Tax was something to the effect, “Did you already receive the Making Work Pay Credit?”.  I checked YES because my husband did receive a small bump in his paycheck last March.  But the question pertained to those who had received an actual $250 check from the government (ie Social Security recipients, Veterans Benefits, Railroad Retirement…) called the “Economic Recovery Payment”.   It looked to me like we would be “double dipping” on this credit if I did not indicate we HAD in fact received something.  I was wrong.  See Tax Girl’s great explanation of why this isn’t the case.

After I realized this I figured I would just wait for my refund and file and amended return to get back the $250 I had mistakenly said we already received.  Turn’s out the government took care of it for me.  With a very nice letter indicating when my refund comes it will include the additional $250.

Here is something I may never say again, “THANK YOU IRS!”

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I can’t believe it’s snowing again.  This is the 5th snow day so far this winter for my two preschoolers.  They only go twice a week for 2 1/2 hours as is!  While I am all about safety first, my own mental sanity has been compromised from being cooped up with 3 little ones this winter.  Not to mention, we are paying tuition for school that does not get made up like it does for”real” school….C’mon Spring!

Some good posts to read if your stuck in your house for the 500th time this season…

Credit Card Chaser asks: Will The new CARD Act turn credit card users into PAYDAY loan users?  What are the unintended consequences of the CARD ACT? One consequence for my family is.  We carry over $11,000 on our credit cards that we are actively paying down, and not adding to – but can’t PAY OFF in full right now.  The credit card companies used the time before the CARD act went into effect to raise the rates on our existing balances.  I can’t wait to be free of this racket!!!

Rainy Day Saver wants to know: What projects are on YOUR to do list? Something is wrong with our fridge light switch.  It stays stuck on.  I’ve taped it so it stays off for now but we were wasting electricity and buying new bulbs at a crazy rate.   Need to find a permanent fix for that.

Ultimate Money Blog: Where Have all the Housewives Gone? I’m right here!  But I call myself  the real fancy sounding STAY AT HOME CFO.  I’ve even heard that there has been a big rise in STAY AT HOME DADS because of the recession.   I think whatever works best for YOUR family be it, financially, logistically, circumstantially and/or emotionally, THAT is the ONLY choice.

Monevator writes: Get out of Debt to Unleash your Inner Money Maker. Sure, it makes logical financial sense to get out debt.  But giving away your money to credit card companies and other debt is not all you give up nor it is all you will gain when you are finally free of your burden….

And after my recent WHINE FEST, I just have to give props to Jeff @Deliver Away Debt for this inspiring post!!!!!

ONE LAST THING

Check out these great Personal Finance Blogs well known and not, they are all members of the YAKEZIE ALEXA CHALLENGE!  Keep up the great work guys.

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Today our credit card debt alone totals over $11,000, but for the first time in a long time I fall asleep at night with hope rather than despair.   I’ve tried for over 2 years to get out debt but truth is we never made a dent in it.  It seems so obvious to me now why I’ve failed at getting our family debt.

One of the big reasons – I was unprepared and underfunded for the yearly bill/irregular bills when they came.   The fact that I never properly budgeted for the sewer bill or the car registration/inspection meant using credit cards or spending any “emergency savings” we had built up.   Basically back to square one.

Then I had an awesome idea that would revolutionize the personal finance world!    I would take all the irregular yearly bills, add them up, divide by 24 (my husband is paid bi-monthly) and make that part of my monthly budget.  I would call it our “Personal Escrow Account.”  GENIUS!

Of course this idea is old news.   In fact Charlotte, the subject of  an article at “Get Rich Slowly”, even calls her method a “Personal Escrow Account.”

While I won’t win any points for originality, this method has saved my budget and my sanity.  Breaking down big irregular bills into smaller semi-monthly payments not only makes me feel prepared but provides breathing room in the budget.

EXPENSES         YEARLY BILL         NEED TO SAVE per PAYCHECK

Sewer bill                        $204                                       $8.50

PreSchool                        $2430                                    $101.25

Cars(approx)                  $400                                      $16.70

Propane                            $1400                                    $58.35

These “mini-escrows”(I’m patenting that) have helped alleviate the pressure that would come any time a non-recurring bill would come due.  I round up the numbers to the nearest $5 and put them in designated ING accounts.  To build up the proper amounts I needed to borrow from the “Emergency Fund”.   I know, I know, YOU NEVER TOUCH the emergency fund but I would have had to either used the emergency fund to pay these bills or a credit card so what’s the difference?

I also add bi-monthly in sub ING accounts to the “Emergency Fund”, a “Christmas Fund” and a “Whatever Fund”.

When you NEED credit cards to pay bills you know you are in trouble.  That is where we were.  Hopefully, no more!  Over $11,000 in credit card debt is no joke, and while the amount we owe is still there I feel the crutch they provided may be gone.

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The Necessary Evil

I’m not very up on current events so when I went to the grocery store today I thought I missed the news the world was coming to an end and we had been ordered to our bunkers with supplies to last for 6 years.  Mad House.  Then, I overheard someone talking about the “big storm”.   Ok, fine, whatever, that’s how it goes when people hear “snow”.

Everyone was super stressed.  Blindly throwing any food they could get their hands on in their overflowing carts.   There were concerned whisperings the store was running low on bread and rumors of “no milk left”  which caused a mild stampede but thankfully no injuries.   I too succumbed  to the Group Think.   And thus want to apologize to all the parents with one child I gave the stink-eye and a heavy sigh of disdain to as you pushed passed me with your one kid happily driving the “race car” cart.  (full disclosure – I also called you a jerk under my breath.)

See the store only has three of these carts and when I am forced to go shopping with a 1 year old, 3 year old and 4 year old this particular cart is the only way to keep three rascals contained and still have a place to put food.  I got a little irrational and blamed you for the fact I had to shop and round-up cats at the same time.  “I’m sorry”.

And you chicken-little’s who gave me dirty looks while I tried to shop with 3 little kids dragging me down, blame the cart hogs with one kid.  Believe me, I don’t want to be here anymore than you want to hear me say to my kids for the millionth time “Guys move over you are blocking the way”.

The financial moral of this story:  I was all flustered by not having “my” cart (yes I consider it mine) and went way over budget on the food expenses this week.  If you want to save money while grocery shopping DO NOT bring your children with you to shop before snowstorms.

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You would think that the financial reasons as well as the emotional reasons to get out of debt would be enough motivation to simply get out debt.

But it’s not the case. Like the struggles and setbacks many people have with weight loss the road to financial freedom is much the same. There is no one to hold you accountable to the debt reduction commitment but yourself and (hopefully if you’re in a shared financial relationship) your partner.

I love reading Personal Finance blogs. Blogs like Get Rich Slowly, Frugal Dad and Dave Ramsey are some of the best known and deservedly most well respected. They are great places to learn tips on getting out of debt, how to cut expenses and are a tremendous resources for all things finance. Those blogs and other blogs like them convinced me I could do this. It could be done. They did it. They are proof.

But most of these people are so ahead of our family in the game that is hard not to feel like I’m at the starting gate and they are getting close to the finish line. It is sometimes frustrating reading how far they have come while I’m still working on getting a realistic and workable budget together.  And it’s extremely tempting to just give up at times.  No one said it would be easy, it’s not.  I don’t expect to be.   But…

I want someone to commiserate with, give me moral support and keep me accountable to the “get out of debt” goal. I know the financial things I need to do get out of debt but I’d love some emotional support as well. Someone in a similar boat. As psychologists know incentives help you reach your goals.

So here it goes:

Family of 5 in debt seeks fellow “debt buster family”. We have made many money mistakes but are committed to getting on budget. Looking for someone to share setbacks with and someone to cheer our successes. Will do same for you. We know how tough it is when you scrimped together that extra $100 to finally put away and your child gets sick and you need that money for the co-pay and prescription. Will not judge but will not enable either.

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