A newborn baby brings many changes to a household, and some of those changes have to do with your finances. Kyle Jones, brand new dad and Financial Planner at Wamhoff Financial Planning and Accounting Services, shares his insight.
- Health Insurance
- The Affordable Care Act allows parents who are covered by an employer-sponsored plan to compare their own plan to a standalone plan for the child, purchased on the Exchange.
- Parents can purchase a private plan for the infant regardless of the time of year because birth is considered a “qualifying event,” making them eligible for coverage.
- Due to the ACA “existing condition” provision, infants, regardless of condition, are insurable.
- Infants born in a hospital will typically be reported by the hospital to establish the birth certificate and social security number.
- Home births require documentation, typically including witnesses to verify the birth of the child. The parents will be responsible for filing documents for birth certificate and social security number.
- Children born prematurely or at very low birth weight may be able to receive Social Security benefits. The hospital typically notifies the parents of eligibility, who may then apply for benefits
- Most insurance carriers will insure the life of an infant 2 weeks after birth. In most cases, an insurance policy that is guaranteed to be underwritten can be achieved as long as the death benefit is not significant.
- A whole life or universal life policy can be appropriate as premiums are fairly low and can be converted by the child later in life into a policy that fits their needs and situation.
- In the event of a premature death of the infant, an appropriate life insurance policy should be designed to remove the financial burden and emotional stress related to the child’s final expenses.
- It’s wise to begin saving early as the money has a longer period of time to grow, and helps parents begin budgeting for future college expenses.
- There are a variety of tools available such as 529 plans, Coverdell plans, and UTMA or UGMA accounts. The type of plan you choose depends on your situation.
- Having a Will or Trust is important to prevent the estate from growing through probate to reach a trustee for a minor child. Basic estate planning documents can help remedy this situation and avoid significant costs that can result.
- New parents should update all of their beneficiary forms on all life insurance and investment accounts to help prevent probate.