Preparing your financial wealth and health for a baby
Having a baby is a huge financial and emotional commitment, and ensuring your finances and healthcare are in order before your bundle of joy arrives will give peace of mind.
The average cost of a Caesarean section in South Africa during 2019, according to Guardrisk’s Admed Gap Cover claims received, excluding hospital stay, is R38 000 to R44 000 and a natural birth, R24 000 to R25 000.
Alexander Forbes Health branch head Tracy Janssens cautioned that prospective parents must join a medical scheme and gap cover well before conceiving, as any pre-existing conditions, like pregnancy, can be excluded by a medical scheme for 12 months. “Ensure the medical scheme option you select has no overall limit on the hospitalisation, as unexpected costs like neonatal ICU can be an enormous expense,” she said.
Janssens also advised that a short term insurance gap product be taken before conception to cover expenses in hospital that your medical aid doesn’t cover in full. “Many medical professionals like gynaecologists, anaesthetists, paediatricians and midwives charge in excess of the medical scheme rate and this can be up seven times higher. For in hospital costs, a short term gap cover product can be purchased to cover this difference.”
The average shortfall payments on a C-Section over the last two years was R8 000 and on normal birth, R7 400. “If baby needs to stay in hospital longer than three days, these costs escalate. Gap cover products are separate to medical scheme cover and cost between R150 to R500 per month.”
“Check if your medical aid plan covers caesarean section delivery if not medically necessary, as is often the case. Your option may also prescribe which hospital and doctors you need to use order to obtain full cover, so you will need to consider this if you have a preferred provider.”
Some medical scheme options have specific benefits for maternity pre-natal care which means your normal day-to-day savings account is not affected by your visits to the gynaecologist, antenatal classes and blood tests. Depending on the plan you select within a medical scheme, some or all of the day-to-day expenses like visits to the gynaecologist or ante-natal classes may not be covered.
Rita Cool, Certified Financial Planner at Alexander Forbes, says parents must add their new babies to their medical aid within 30 days of its birth. “Otherwise you risk having your child excluded for any existing conditions. Complete an application form and send it to your medical scheme, along with the birth certificate.”
In preparing for your newborn, find out from your employer how many months of maternity leave you are entitled to and if you get paid your full salary during this time. “Remember to claim your Unemployment Insurance Fund benefits. Check with your Human Resources department what the company policy is and what you qualify for.”
Once you return to work, you will need to find someone to look after your baby. “Will they attend a daycare or will you get a nanny? Don’t forget to budget for this,” she said.
Cool said the birth of your child is the perfect time to draft or update your last will and testament, a document which will protect your child in the event of you or your partner’s death. “Here you can specify your child’s guardians and also set up a trust for your child where your assets can be kept until they reach adulthood.”
Review your life cover benefits. “You need to ensure that there is enough capital available to take care of your child for the rest of their life should you die unexpectedly.”
“Finally, set up an education policy as soon as possible, even if it is just a small monthly amount. This will help you give your baby the best educational future possible.”