Pregnant? 5 reasons you should max out your HSA
Health insurance for expecting mothers
Are you expecting? Congratulations! What an exciting time. As an expecting mother myself, I discovered some important things for moms to know about Health Savings Accounts that I wanted to pass along. Contributing to your HSA, or even better, maxing it out this year may be more important than ever.
Pregnancy can be an exciting, yet overwhelming time, because there are many decisions to be make. Will you go back to work? What daycare is best? Who will deliver your baby? Will you move or stay in your current size residence? How will you pay for the new costs associated with both having and raising a baby?
Let me take one decision off your plate: max out your Health Savings Account (HSA) this year. The HSA contribution limits in 2014 are $3300 for individuals and $6500 for families. Note: you need to have a health plan that is eligible for an HSA.
Here are 5 reasons expecting moms should max out their HSA:
1. It’s tax-deductible.
The money you put into your Health Savings Account is tax-deductible, which means it costs you less to pay for the same hospital bills. For example, let’s say you are in the 25% tax bracket. If you pay for your $5,000 hospital bill after taxes, then you need to make $6250 in order to pay the bill. If you pay the same $5,000 hospital bill with money you’ve put aside in your HSA account, then you have to earn $5,000 to pay for it. That’s a $1250 difference just by planning ahead!
If your HSA plan is through your employer, then you can probably make contributions that your employer takes out of your paycheck before taxes. If you have an individual plan with an HSA, then you can contribute and write it off on your taxes at the end of the year.
2. Having a baby is expensive.
I’m probably stating the obvious, but even the most standard, non-complicated vaginal birth costs thousands of dollars. We wrote a detailed post here about what to expect about costs when you’re having a baby.
But here’s an overview:
Cost to have a baby:
Prenatal visits (average of 8) - $108 per visit
Diagnostic x-rays and laboratory charges - $40 each
Ultrasounds - $159 each
Delivery (including use of delivery room, hospital bed and board, physician services, and anesthesia) - $6,034 vaginal, $8,725 cesarean
Routine newborn circumcision - $200
All in, the total cost can range from $7,695 - $10,386 for a routine pregnancy before insurance. The cost can increase to more than $20,000 if there are complications, but remember this is all before insurance.
3. Money in your Health Savings Account rolls over from year-to-year.
It’s not a use-it-or-lose it account like other health insurance bank accounts. This means you don’t have any risk of worrying about not using all your money i in a given year—so you can max out your HSA and stand prepared for whatever medical bills come your way.
4. It will save you from the last-minute stress of scrambling to pay for medical bills.
Now, admittedly I’m a huge planner. But even if you are not, this is the one time in your life to put aside the YOLO mentality and plan for the future. You know your future will include expensive medical bills, so maxing out your HSA is a way to plan for that future. Having a baby can be stressful, but this is one way to reduce your stress.
Can’t afford to max out your HSA? Just contribute as much as you can because it will create long-term savings. Paying for medical bills with money after taxes is like throwing money away. Be smart and let us know if we can help reduce your stress during this exciting time.
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