You can do a lot of fun stuff with a quarter of a million dollars. That kind of money would buy a ridiculously fancy car. You could pamper yourself for years by taking lavish vacations. Or, you could raise a child.
It costs $245,340 to raise a child born in 2013 through the age of 18, according to the most recent estimate from the U.S. Department of Agriculture. Factor in projected inflation, and that figure climbs to $304,480.
But that figure doesn’t include a pretty crucial aspect of the whole “having a kid” thing — the cost of giving birth.
Newlyweds Michael and Aileen Andello are expecting their first child in September, and when they started researching the medical expenses associated with childbirth, they were shocked.
“They are literally charging for every little thing,” Aileen said. After a few months of routine visits to the doctor, the Andellos started to see how much they’d have to pay before they even had a child. As new parents, they’re eager to make sure everything is going well, but they’re also learning that each test and extra ultrasounds add to the bill. For many reasons, they’re thrilled to be expecting a healthy baby. They recently found out they’re having a little girl.
“If you aren’t having the perfect pregnancy, it’s going to cost so much more,” Aileen said.
Preparing for the Unpredictable
Figuring out exactly how much child birth will cost is incredibly difficult. Not only is every pregnancy different, but so is every insurance policy. That’s what really caught the Andellos off guard.
Aileen, 25, is still on her dad’s insurance. They didn’t realize he has a high-deductible plan.
“He’s like, ‘I think our insurances are $5,000, maybe $10,000 deductible,'” Michael said, recalling a casual conversation they had with her father right after she found out she was pregnant. “That was my initial ‘Oh s—, this is going to cost more than I thought.'”
The insurance has a $6,450 deductible, and the patient is responsible for 30% of the bills covered by insurance.
The Andellos aren’t strangers to the costs of adult life — they just bought a house in November.
“I think I was more prepared for the homeownership, cost-wise,” Michael said. “I knew that a kid costs a bunch, when it comes to diapers and formula and stuff, not that it’s going to cost me $7,000 just for the birth.”
For the Andellos, the deductible will mostly be met by the time their daughter is born. (Unfortunately, that financial break comes because one of Aileen’s family members needs surgery.) Still, they’re trying to figure out how to budget for the out-of-pocket expenses, which can be difficult to predict.
How to Estimate the Costs of Childbirth
Like the Andellos have learned, every little medical service has a price. When you’re in the middle of having a baby, it can be hard to think about finances when you’re confronted with so many choices, like if you want a certain test or an extra pair of socks.
But pregnancy has an advantage many medical procedures do not: Time to plan.
“The second the test is positive go and talk to whoever you’re going to look to to deliver the baby and ask for a written estimate,” said Sarah O’Leary, founder of ExHale Healthcare Advocates. Though you probably already have a primary care doctor and OB-GYN, consider researching multiple providers and what they’ll charge you for childbirth.
The process starts by finding a health care provider in your insurance network and calling to confirm that the doctor has an active contract with your insurance, said Adria Goldman Gross, president of Medwise Insurance Advocacy. Ask for cost estimates, compare them with the average costs in your area for the same procedures (you can research that online), and once you’ve settled on who is delivering your baby and where the delivery will occur, get everything in writing.
“When a doctor asks (an insurance company) for preauthorization, they need to give the procedure codes, ” Gross said. The process takes about a week, she said. “You’re going to ask for them in writing.”
You’ll also want to make sure you have a solid understanding of your pregnancy coverage, so you’re prepared for what you’ll have to pay out of pocket. O’Leary recommends calling your insurance provider so you can ask questions as the policy is explained to you.
In addition to getting the estimates, make it clear with your health care provider that you want “everyone who touches you” to be in your insurance network, O’Leary said. She also recommends you establish with your doctor that you only want to receive what is medically necessary, to avoid having to pay for any charge your insurance may not cover.
“The best advice is to question really everything, ” O’Leary said. She went on to describe the legwork as a second job — one that can really pay off in the end. “The more work you can do upfront before the birth, it kind of puts everyone on notice that you are clued in, and that will always work to your benefit.”
The Andellos still have a few months left in this process, and they said what they’ve learned so far has made them more mindful of the financial aspects of pregnancy. They want to have a few kids, but maybe not as close together as they previously thought they would.
“They always say high school and college will prepare you for life but it doesn’t prepare you for the cost of life,” Aileen said. “It’s kind of a different perspective for us. It’s not something we were taught about.”
Whatever you might be budgeting for, it’s good to keep in mind your overall financial well-being. High debt levels, among other things, for instance, can keep you from a good credit score. Alternatively, people without savings may not be able to make all the payments they need to if something disrupts their budget, which can lead to loan default, debt collection accounts and credit score damage. (You can see where your credit currently stands by viewing your two free credit scores on Credit.com.)
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Main Image: sdominick; Inset Photos Courtesy of Michael & Aileen Andello