My husband quit his job to start another company. His prior company didn't have enough people for us to have COBRA. We finally found a decent company to have insurance with for now. The problem is maternity. We are trying to start a family, and our insurance doesn't cover pregnancy without a rider. The rider is expensive, and then it only covers $2,000 after a year. Is there anything else out there that we can use to cover the maternity? Do states offer anything to help small business owners?

J.L.

Under some types of coverage, the cost of maternity benefits is equal to the benefit itself. If you look at the cost of the maternity rider you describe, you might find this to be the case. You have several choices in this situation, and each requires careful consideration before making a decision.
First, you could add the rider to your policy, but this does not seem like the most cost-effective option. Second, only slightly different from the first option would be to keep your current coverage as it is and put money away on a regular basis for the purpose of covering anticipated maternity expenses. After all, why send the money to an insurance company if the net result to you is about the same? Put the money to work for you. Talk to a financial advisor for the best way to establish such a fund.

Third -- and even better -- establish a Medical Savings Account (MSA). Your question implies that your husband is either self-employed or owns a small business. Either way, you are eligible to open an MSA. An MSA is a high-deductible health insurance plan combined with a tax-free savings account to be used for out-of-pocket medical costs. This is like the second option, but differs in that the money you deposit into the MSA reduces your taxable income, and if it is used for medical costs, it can be spent tax-free. So when you factor in the tax savings, a dollar deposited into an MSA costs you less than a dollar of income. You can use MSA funds to pay for your deductible and any co-insurance, or for any medical service even if it isn't covered by your health plan.

An MSA requires a health plan with a minimum deductible of $1,550 for an individual and $3,100 for a family. If your current insurance carrier does not offer an MSA-qualified plan, you would have to change carriers. But keep this in mind: a high-deductible health plan costs much less than a low-deductible plan, and you may find one that includes maternity benefits at a reasonable rate. Then you can take the money you saved in premiums on the high-deductible plan, the money that you normally would use for out-of-pocket expenses, and the amount you would have spent on a maternity rider, and deposit the total into an MSA. This reduces your taxable income and gives you a tidy medical fund for future needs. For more MSA information, simply search the web for "Medical Savings Accounts."

Fourth, you can shop for more comprehensive insurance. There may be options for you with association plans, managed care organizations (HMOs) or traditional health insurance. HMOs have very comprehensive maternity coverage if you feel comfortable in a restricted network plan. Association and traditional insurance plans often use preferred provider organizations (PPO) to help keep the cost as low as possible.

Consider these alternatives and shop around for an affordable solution. Remember, however, to keep your current coverage in force until you have established new coverage, and make sure that you have the maternity-financing plan (whether that is insurance or savings) in place before you get pregnant. Under some circumstances, insurers will not issue coverage to a family when the wife is pregnant or will exclude pregnancy as a pre-existing condition. You are wise to plan for this before it happens.