By Elizabeth Ingram (who just added child #2)
Vice President – Operations Insurance Trust
Finding out you are having a kid, even if planned, is overwhelming. What do you need to have on hand or want? When do you start to prep & who do you turn to for advice? Your family & friends will probably be able to give you tons of advice on where to register & their favorite diaper brands or tricks (& there’s something to learn every time as I’ve recently discovered thanks to my coworker & mom of 3, Heather Baird, who is also our benefits Account Manager). However, there are also a bunch of long-term items that you need to be on top of to take care of your growing family.
Before Baby Arrives
- Start looking for childcare ASAP if one parent isn’t planning to stay home. A lot of childcare centers have long waiting lists for babies or don’t accept them until 6-12 months. Also, this is going to have a major impact on your budget & the sooner you know how much you’ll be shelling out each week, the sooner you can plan. Ask friends, family, & coworkers with young kids for advice or check out https://www.maine.gov/dhhs/ocfs/ec/occhs/child-care.html in Maine.
- Find a pediatrician around the middle of your pregnancy. Your primary care doctor may also care for kids, but if they don’t, ask for a recommendation. If you don’t have a primary care doctor, or don’t feel comfortable with their advice, crowdsource & then meet the pediatrician to make sure you feel comfortable with them (think of it as an interview). You’ll also want to make sure the doctor is in-network for the medical coverage that will be covering the baby as it will save you some major money on those first-year vaccines.
- Check in with HR (human resources) if you are working (both parents need to do this) to find out what your Family Medical Leave (HR) eligibility is. On the federal level, FML applies to groups with 50+ employees (https://www.dol.gov/whd/fmla/), and in Maine, a more limited FML applies to groups with 15+ employees (http://www.mainelegislature.org/legis/statutes/26/title26sec844.html). Your eligibility depends on how long you have been with the company and how many hours you work. You will also want to ask whether leave needs to be taken as a block or can be taken intermittently. Also, ask HR if you are eligible for any paid leave and confirm what you have for sick and vacation time.
Pregnant moms will also want to confirm with HR if they have short term disability (STD) coverage. STD can be an employer paid benefit or a voluntary benefit that you pay premiums for; you might have neither or both. If you have coverage, check what the waiting period after birth (or being taken off work by your doctor) is as well as how long it lasts (generally 6 weeks) and how much of your income it replaces. You won’t be receiving your full paycheck while STD is being paid, so you’ll want to budget for this ahead of time.
Before baby comes is also when you should start looking into life insurance if you don’t already have it & deciding who you want to have guardianship of your children in the case of your death. More on this below.
After Baby Arrives
You’ve just brought baby home and just making sure that little bundle stays alive and sleeping are all you have on your mind, but before you go back to work and things get even busier for a time, there are a few things worth taking care of to secure your little one’s future.
- Add baby to your health insurance within 30 days of his/her birth. Otherwise, you’ll have to wait until your health plan renewal. You’ll need to get a form from HR and while you’re at it, ask how your premium (and paycheck) will be impacted if you haven’t already.
- Create or update your will. I know this is easy to put off, but it’s the ultimate in saying ‘I love you’ to your kids. You can see a lawyer, buy a willmaker program, or use your LegalShield coverage. You and your spouse should have wills that mirror each other when it comes to who gets your assets and, more importantly, who takes care of your kids. You’ll need to pick a guardian for your kids and you’ll want to choose someone who is responsible for handling finances as well. Make sure to sign the finished wills and have at least a couple copies. Each kid requires an updated will that includes their information.
- Life insurance. If you already have this, now is the time to revisit whether you need more or just need to update the beneficiaries. Remember that minors shouldn’t be direct beneficiaries so you can use the Uniform Transfers to Minors Act or another option that better fits your needs instead.
- If you don’t already have life insurance and you aren’t crazy rich, please consider this. I know money is getting tighter, but the premium cost is worth it. You should at least have enough to pay off any debts (student loans, mortgage, care loans, credit card debt, etc.) and for a funeral (which can run to $10,000). However, if you can afford it, you should try for enough coverage to cover your children’s expenses to age 18 or through college. You may be able to get a voluntary, transferable policy through work (such as through Colonial), or you can meet with a financial advisor to see what you can afford.
- Speaking of a financial advisor, you’ll want to update the beneficiaries on any retirement accounts you might have both in & out of the workplace. You’ll need to do this each time you have a kid. Don’t forget to update your HSA beneficiaries as well if you have one.
- If your kid was born in Maine, they are eligible for a $500 contribution to their 529 college fund in the first year of life through the Alfond Fund (https://www.500forbaby.org/). You do need to set up the 529 which you can do on your own or with your financial advisor. It doesn’t cost you anything to set up (other than your time), and it ensures that your kid has something saved for college. Even better, the Alfond fund matches contributions at 50% to $300 (i.e. you put in $600 & they put in $300) in the first few years of life, so when your playroom is overflowing with toys and relatives want to give your kids presents, you can direct them towards the college fund. That’s right; anyone can contribute to the 529 once it is in place.
- Once you get a copy of your kiddo’s birth certificate, it’s time to freeze their credit. Our December blog post (https://insurancetrust.us/how-to-freeze-your-childs-credit-for-fraud-prevention/) details how.
- Another kid, another tax deduction. Take a few minutes and make sure that your tax deductions are set up correctly (https://www.irs.gov/individuals/irs-withholding-calculator), so you have money to pay bills now and no nasty surprises come next tax season. You will need total household income and pre-tax deductions to do this, but it’s worth the time. Keep in mind that this is a changing target, so check back at the beginning of each year. You’ll need to provide your updated W4 forms to HR or payroll to make changes.
- I’m sure you’re feeling as though you’ve done more than enough at this point (I know I did), but there’s one more thing to do. If you can afford it, now is the time to get a whole life insurance policy on your newest addition. Whether it’s through your voluntary coverage at work (such as Colonial) or the Gerber policy that you’ll probably receive a mail offer for soon if you haven’t already, now is the time. For the cost of a cup of coffee or two, you can get whole life insurance on your baby that will protect them and you for a lifetime. For now, it will pay in the event that every parent’s worst nightmare comes true and you have to bury your baby. Otherwise, it’s a security that if your child becomes uninsurable, they have some coverage as an adult.
- Effective 1/1/2020: The NextStep Matching Grant changes from 50% of contributions over $50 for the year to 30% of contributions over $50 for the year; the grant cap remains at $300/year. More information can be found at https://www.nextgenforme.com/matching-grants-for-maine-residents-changing-january-1-2020-for-calendar-year-2020/. If you aren’t a Maine resident (or need another account to be in your name for employer gifting/matching), you can easily set up a 529 at https://collegebacker.com/. It took me about 15 minutes and lets you put in as little as $5.00 at a time.
And remember, that you aren’t alone in this. If you aren’t sure what needs to be done or how to do something, reach out to HR, your benefits broker, or a financial advisor. Your family deserves the best.