As young families already know, the costs associated with bringing a new child into the family can quickly add up. Fortunately, there are tools and programs available to help families and cover some of the costs.
In the U.S., if an individual works for a company with 50 or more employees, the Family and Medical Leave Act (FMLA) requires the employer to allow mothers 12 weeks of unpaid leave each year after the birth or adoption of a child. This time off is wonderful, but what about earning money during this time?
There are a few ways to receive income during most or all of the time that the individual is not at a job during these 12 weeks. For example, paid time off (PTO) does not need to be used only for vacations. Though it is important to check with an individual employer to ensure to be clear about policies, any saved PTO can be used for maternity or paternity leave. Personal or sick days may be used as well. Short-term disability can also be used for up to 6 weeks after birth or adoption for between 50-100% of regular income. After using all benefits, a parent may remain out of work, as needed, up to the 12 weeks set by the FMLA.
In Maine, many employers offer insurance to employees that cover medical costs associated with bringing a new child into the family. If not, MaineCare provides free or low-cost health insurance to those who meet certain requirements. Medicare, MaineCare (Medicaid), Children’s Health Insurance Program, and insurance through the Health Insurance Marketplace (Affordable Care Act) can also help a family obtain coverage if an employer does not offer it or if an individual is not working.
With all these programs and tools available, there will always be some out-of-pocket costs. This is why parents need to save money ahead of time, to the best of their ability. Certain types of accounts, such as Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA), can not only help parents save, but they have tax benefits as well. For the FSA, money contributed to the account is deducted from earnings before taxes, lowering an individual’s taxable income. However, all funds must be used by the end of the calendar year or they are forfeited. With an HSA, money can roll over from year to year and is also deducted from earnings before taxes. To contribute to an HSA, an individual must be enrolled in a high-deductible health plan.
Although at times it can be costly and challenging, many parents say that a new child’s arrival into a family is one of the most fulfilling experiences of their lives. Learning about the available tools can make it much more manageable.