Congratulations! Growing your family is often one of the most joyful life events one will have. Whether you’re getting married, entering a long-term partnership, or welcoming a child into your family (through adoption or pregnancy), planning for healthcare coverage is important. While both marriage and having a baby are qualifying events that allow you to make changes to your health insurance, it is worth noting that pregnancy is not considered a qualifying life event that allows you to change your health plan elections mid-year. Here are a few things you will want to consider when establishing health insurance for the whole family.
Marriage or Partnership
- Imputed income is the fair market value of the additional benefit coverage for domestic partners and, under IRS regulations, is generally treated as taxable.
- If you pay for health insurance for domestic partners or other beneficiaries that are not legal spouses or dependents as defined by the Internal Revenue Service (IRS), your employer will calculate the estimated fair market value (FMV) of those health benefits and credit that amount to your “imputed income”. This can result in additional taxes for you. So officially promoting your fiance to a spouse can save you in monthly premium costs.
- Do both plans cover the medical care you anticipate needing?
- How do the monthly premiums, the deductible, out-of-pocket amounts, and the types of services the plans cover compare?
- Will you need to change doctors or pharmacies to have in-network coverage?
- Some employers require you to take their insurance and do not offer the ability to waive coverage.
- Others might charge a surcharge if you decide to cover a spouse who is eligible for coverage through their own employer.
- All plan types will charge more for covering two people on the plan, rather than covering just one person.
- Paying close attention to those rates and limitations can help inform your decision.
- If you do decide to change your plan to your partner/spouse's plan and are currently in a course of treatment with a provider or medication that isn’t covered under the new plan, you have options. You can request a ‘Continuation of Coverage’ review to continue with the same doctors or medications under the new plan.
- If you both have an HSA account you will want to check your contribution limits for the year to make sure that you have not over-contributed for the IRS family maximum. You can read more about HSA plans and contributions here.
Last but not least, it is always advisable to update your emergency contact information and beneficiaries.
Adoption or Pregnancy
Regardless of the health insurance you choose, both parents should notify their HR Administrator as soon as possible when a new child will be added to the family. Many employers have special benefits relating to time off work, support services, or even small gifts for the addition of a child to the family.
- When you can choose whose plan will cover your children after their birth or adoption, you’ll want to compare the plans of both parents and decide which plan is better to cover the children as well. Some things to consider:
- Which plan best covers the medical care you anticipate needing?
- Consider the monthly premiums, the deductible, out-of-pocket amounts, and the types of services the plans cover.
- Will the hospital and pediatrician you want to use be covered?
- If you and your partner/spouse both have individual coverage and want to use both health plans to cover a new arrival, be aware of the birthday rule. This rule is how insurance companies determine which plan is primary or secondary for a dependent child when covered by both parents' benefit plan. The parent whose birthday (month and day only) falls first in a calendar year is the parent with the primary coverage for the dependent.
- If you wish to add your child to both parents’ plans, these factors should be considered:
- Unless these plans cover vastly different services, or your child is expected to be a high utilizer of healthcare, dual coverage is rarely the most affordable option.
- You will want to weigh the benefits of additional coverage against the additional monthly premiums of having two insurance plans.
- If a child does have dual coverage, determining which plan is going to be primary and which plan will be secondary is set forth by the ‘Coordination of Benefits Rules’. It is not a personal choice or one you can control so it would be important to know which plan will be primary and if that will suit your family's needs.
If you have enough on your mind planning for these special events, and the above considerations feel overwhelming, Caribou is happy to help. Consider an initial consultation with us to discuss your individual situation and what questions you might have about the insurance options available to you.
Learn More:
What is Imputed Income? | SHRM
Coordination of Benefits | CMS.gov
Last Revised June 30th, 2022
