Does Medicare Cover Hearing Aids? 6 Ways to Save Money

Affording hearing aids is challenging if you’re an older American on Medicare.

That’s because Original Medicare — which covers a majority of beneficiaries — doesn’t cover hearing aids, fittings or hearing exams.

That’s right — not a dime. And hearing aids are expensive: The average cost for one pair ranges from $3,000 to $6,000.

About 1 in 3 people between the ages of 65 and 74 have hearing loss, and nearly half of people 75 and older have difficulty hearing, according to the National Institute on Aging.

For now, older adults are mostly on the hook when it comes to paying for hearing care.

In this guide, we break down what hearing aid coverage is available to both Original Medicare and Medicare Advantage beneficiaries.

We also explore other ways to save money on hearing care, including Medicaid and nonprofit programs.

Does Medicare Cover Hearing Aids and Exams?

Original Medicare doesn’t cover hearing aids or exams for fitting hearing aids. Some Medicare Advantage plans have hearing aid coverage, but it varies by plan. Some other services are covered under both, however.

Original Medicare

In some situations, Original Medicare coverage may pay for cochlear implants or hearing tests in emergency situations.

Original Medicare covers 80% of the cost of cochlear implants for those who qualify. Cochlear implants are considered medically necessary for the treatment of a severe to profound hearing impairment.

Medicare Part B will generally cover a cochlear implant if you recognize sentences while wearing your hearing aids only 40% of the time or less.

Medicare Part B will also cover 80% of a diagnostic hearing test and balance exams, but only if it is ordered by your doctor or health care provider during an emergency.

For example, a doctor may run these tests to diagnose the cause of dizziness or vertigo.

Need a refresher on how Medicare works? Check out answers to seven frequently asked questions. 

Medicare Advantage

Original Medicare doesn’t provide hearing aid coverage, but many Medicare Advantage plans offer hearing health benefits.

Medicare Advantage plans are administered by private insurance companies. They must provide the same basic coverage as Original Medicare, but plans may offer additional benefits, such as hearing aids.

About 93% of Medicare Advantage plans provided some hearing aid coverage in 2021, according to the Kaiser Family Foundation.

But how much coverage each Medicare Advantage plan provides varies.

For example, the KFF analysis found that about 60% of enrollees are in plans that require cost sharing for hearing aids, which ranged from $5 up to $3,355 in 2021.

Most plans also include coverage limits and restrict you to a specific network of physicians.

Make sure you calculate your potential out-of-pocket costs when choosing a Medicare Advantage plan.

Remember: Even with a good Medicare Advantage plan, you may still face out-of-pocket costs, such as premiums and deductibles as well as copayments to see an audiologist for fittings.

6 Ways To Get Cheap Hearing Aids

Medicare beneficiaries who accessed hearing care services spent an average of $914 out-of-pocket in 2018, according to an analysis by the Kaiser Family Foundation. For many, that’s simply out of reach.

Some national organizations cover hearing aids for people with low incomes and limited resources. These programs often have strict eligibility criteria and may be difficult to qualify for.

There are other ways to get affordable hearing aids, including shopping around and asking your audiolist for sliding scale payment options.

1. Miracle-Ear Foundation’s Gift of Sound Program

The Miracle-Ear Foundation’s Gift of Sound program helps provide hearing aids for adults with hearing loss.

The program is available to individuals with significantly limited incomes under 200% of the federal poverty level who have exhausted all other financial resources.

You need to contact your local Miracle-Ear store before starting an application. Supporting documentation from a hearing care professional and an application fee of $150 is required.

You can find more information about the Gift of Sound program along with eligibility requirements here.

2. Help America Hear Program

The Help America Hear program provides hearing aids for adults with limited financial resources.

The program can provide both new ReSound behind-the-ear and receiver-in-canal digital hearing aids.

There are three qualifying tiers based on gross household income, personal assets and health insurance coverage.

Every applicant is required to pay a fee, which can range from $125 to $500 for one hearing aid, to $250 to $1,000 for two hearing aids.

The application process is extensive and requires medical documentation, proof of income and proof of health insurance (if any).

The entire application process can take two to six months, according to the organization’s website.

If you qualify, you are still responsible for the cost of the hearing evaluation, batteries, accessories as well as extended loss and damage warranties.

Click here to check out the Help America Hear program application.

3. Check Out Costco

Comparison shopping is important if you want to save money on hearing aids.

Wholesale clubs like Costco offer great deals on hearing exams, fittings and devices.

Costco’s private brand, Kirkland Signature, sells hearing aids for about $1,400 per pair — about half the price you’d pay elsewhere for a name-brand equivalent. They also offer free hearing tests.

Not every Costco location has on-site audiologists or hearing specialists and you’ll need an appointment. You’ll also need to sign up for a Costco membership, which starts at $60 a year.

4. Talk to Your Doctor

It never hurts to ask for a discount.

It may sound like a no-brainer, but simply asking your health care provider for a more affordable price can really help.

According to Consumer Reports, almost half of all hearing aid users in their survey who asked for a lower price on their hearing aids ultimately received a discount.

Most audiologists and hearing care professionals offer financing plans and some offer sliding scale payment options.

Wherever you go to purchase your device, try bargaining or asking for a lower-priced model.

The price of a hearing aid is sometimes “bundled” to include the device plus other costs, like the audiologist’s services for fittings, adjustments and follow-up care.

Asking your provider to unbundle their services and provide you with an itemized list of charges can help you save money because you’ll only pay for what you need.

5. Keep an Eye Out For Over-the-Counter Hearing Aids

Hearing aids may get much more affordable in the near future thanks to an FDA proposed rule issued in October 2021.

The rule would create a new class of over-the-counter (OTC) hearing aids available without an exam or fitting by an audiologist.

OTC hearing aids would be available from any seller — and at a fraction of the cost. Consumers could pay about $600 per pair instead of upward of $5,000 per pair, according to Harvard Health Review.

It would also cut the red tape many consumers face: Currently, patients must see a licensed hearing professional and obtain a prescription before they can buy hearing aids.

OTC hearing aids will be available to adults with mild to moderate hearing loss, and will be equipped with the same basic technology as traditional hearing aids.

The FDA is currently finalizing its proposed rule. OTC hearing aids are expected to hit the market by the end of 2022, according to The New York Times.

Local Organizations and Programs

Some local and regional nonprofit programs provide financial assistance or discounted hearing aids to those who qualify.

You can call United Way’s 2-1-1 social services number or contact your local Area Agency on Aging to see what’s available.

To find the contact information for your local Area Agency on Aging, enter your zip code into the Eldercare Locator tool operated by the U.S. government.

Other Hearing Care Insurance

Medicare coverage for hearing aids may be limited but Medicaid and VA benefits can help pick up the cost if you qualify.

Medicaid

About one in five Medicare beneficiaries is also enrolled in Medicaid, sometimes referred to as being “dual enrolled.”

Medicaid is a federally-funded health insurance program for people with low incomes. It’s administered at the state-level, so each state determines its own hearing benefits and limitations.

About half of states offer some hearing benefits and coverage for hearing aids.

What’s covered varies even among states with hearing aid benefits. In Florida, for example, you can receive a pair of hearing aids once every three years but in North Dakota, Medicaid recipients are entitled to hearing aids only once every five years.

In some states, like New Jersey and Massachusetts, hearing aids are only available with specific Medicaid plans.

You can see what benefits your state offers along with any limitations and requirements by visiting this comprehensive list from the Hearing Loss Association of America.

Or call and ask the Medicaid program in your state to see if you qualify.

Veterans’ Benefits

Veterans may qualify for hearing aids through the U.S. Department of Veterans Affairs (VA).

You must enroll in the VA Health Benefits program to qualify.

Once enrolled (or if already enrolled), you can schedule an appointment at an Audiology and Speech Pathology Clinic for a hearing evaluation.

If the doctor recommends hearing aids, you can receive the devices for free so long as you maintain VA eligibility for care.

The VA will also provide necessary maintenance of any hearing aids you receive, including replacement batteries, cleaning and adjustments.

If you live more than 40 miles from a VA clinic or if you can’t get an appointment for at least a month, you may qualify to see a private audiologist through the VA’s Choice Program.

The VA provides hearing aids to the following veterans:

  • Former Prisoners of War.
  • Purple Heart recipients.
  • Those rated permanently housebound or in need of routine care.
  • Those with any service-related disability.
  • Those with hearing loss resulting from a disease or medical condition for which they receive VA care or disability.
  • Those who have hearing loss severe enough that it hinders their ability to participate in their own medical treatment or daily living.

Even if you don’t use the VA for your other health care needs, it’s smart to use it for hearing aids. It’s one of the only programs that provides high-quality devices at no cost.

To apply, visit your local VA office, go online or call 877-222-VETS (8387).

Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.

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Source: thepennyhoarder.com

What Is a Health Reimbursement Arrangement (HRA) and How Is It Used?

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Whether you work for a large employer or a small business, health reimbursement arrangements (HRAs) provide a tax-free way to cover medical costs. 

An HRA essentially gives you a stipend to reimburse you for health care costs like insurance premiums, copays, prescriptions, and over-the-counter drugs, relieving some financial pressure, making them one of the most critical benefits employees seek.

This guide details everything you need to know about health reimbursement arrangements, including how HRA plans work, how they’re different from health savings accounts and flexible spending accounts, and what you can do with the funds. 

What Is a Health Reimbursement Arrangement (HRA)?

Health reimbursement arrangements, sometimes called health reimbursement accounts, are employer-funded accounts that help employees and their covered dependents pay for out-of-pocket health care expenses. HRAs work in tandem with your employer-sponsored health insurance plan to reimburse things like your copays, deductibles, or prescription medication.


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An HRA plan is a valuable tool to pay for medical costs not covered by your health plan. It reimburses you with tax-free money provided by the employer as an employee benefit.


How an HRA Works

Imagine you have a sick child who needs prescription medication. The copay for the brand-name drug (with no generic available) gives you sticker shock. Suddenly, high out-of-pocket bills overwhelm your monthly budget, forcing you to make some financial adjustments.

Fortunately, you submit a reimbursement request on your HRA and receive a check for the amount you spent at the pharmacy.

Employers set up HRA programs to provide extra funds for qualified medical costs you, your spouse, or your dependents incur. Employers are the sole source of HRA funds; employees cannot contribute to their HRA.

Every year, the participating employer determines how much they will contribute to your HRA. The IRS requires that every employee have access to the same amount of HRA funds. Fortunately, unused account balances roll over to the following year.


Types of HRAs

There are three types of health reimbursement arrangements. Which type you have access to depends on your employer’s circumstances. 

Qualified Small Employer HRA (QSEHRA)

Small businesses employing fewer than 50 full-time workers can set up a qualified small-employer health reimbursement arrangement, also known as a small-business HRA. 

These businesses are exempt from providing employer-sponsored health insurance. So employees must get their insurance through the national or a state marketplace if their employer doesn’t offer one.

Funds in your small-business HRA can subsidize health insurance premiums or refund medical expenses you pay out of pocket.

The IRS limits how much your employer can contribute to a small-business HRA. The amount changes with every tax year. For example, in 2022, the IRS capped employers’ contributions to $5,450 for self-only employees and $11,050 for employees with a family.

Individual Coverage HRA (ICHRA)

Some employers don’t offer employee health insurance but are willing to provide a stipend to cover the premiums. The individual coverage HRA helps employees pay for health insurance if their employer has no employee health care plan.

Since January 2020, individual coverage HRAs have created a new way for small employers to distribute tax-free money for health insurance. As a result, you can use your HRA funds to buy health insurance coverage through the HealthCare.gov or state marketplace or directly from a private insurer. Previously, rules prohibited employees from using HRA funds to pay for individual health insurance premiums. 

If you’re 65 or older, you can use the individual HRA balance to cover Medicare Part A, Part B, and Part C (Medicare Advantage) premiums. If you are still working and on Medicare, your employer may require Medicare coverage verification each time you request reimbursement from the individual coverage HRA.

Group Coverage HRA (GCHRA)

High-deductible health plans (HDHPs) offer more significant savings to employers since the premiums are typically lower than traditional group health insurance plans. However, employees must pay medical bills in full until they meet the deductible, which is several thousand dollars.

So some employers offer a group coverage HRA in conjunction with HDHPs. Since HDHPs can have higher out-of-pocket expenses, the group coverage HRA helps close the gap between the high deductible and the employee’s medical needs.


HRA vs. HSA vs. FSA

In addition to HRAs, there are two other programs that complement health insurance plans: health savings accounts (HSAs) and flexible spending accounts (FSAs). Typically, they all work on a reimbursement basis, but some employers offer debit cards for direct access to funds.

HSAs are unique because the account goes with you after leaving an employer but can only work with HDHPs. Although it requires cash contributions, you control the money and can invest the HSA balance in stocks, bonds, and mutual funds.

FSAs are similar to HRAs. However, they’re known for use-it-or-lose-it rules (they don’t roll over each year), and employees can contribute through salary reduction.

HRAs, HSAs, and FSAs have some important differences that could affect which one’s right for you. Those include:

  • Who funds it
  • How much money can be added annually (individuals; families)
  • Whether the employee pays taxes
  • What type of health plans it works with
  • Whether you can use it to pay health insurance premiums
  • Whether unused funds roll over each year
  • What happens to the funds when you leave the employer (portability)

Comparing the differences between HRAs, HSAs, and FSAs, you can see that there are pros and cons to each. So if you have access to more than one and can only fund one, consider the benefits and drawbacks carefully before deciding.

HRA HSA FSA
Funding Source Employer Employer or worker Employer or worker
Annual Cap (2022) Unlimited on most $3,650; $7,300 $2,850
Employee Taxes  No No  No
Plan Type Any  HDHP Any
Premium Coverage Yes No Not usually
Rollover Yes Yes Sometimes
Portable No Yes No

Advantages & Disadvantages of HRAs

An HRA is a powerful tool to manage health care costs. Essentially, HRAs are free money for employees with great flexibility in how you choose to spend it. Plus, employers also win because they can deduct 100% of requested reimbursements from their taxes. 

But there are advantages and disadvantages you should consider carefully.

Advantages

HRAs have plenty of advantages for employers, such as their tax-deductible status. But HRAs have robust benefits for employees too.

  1. Contributions Are Not Taxable as Employee Income. Employees don’t pay income taxes on the amount their employer provides in an HRA, lowering their taxable income.
  2. Withdrawals Are Tax-Free. Employees pay no income taxes when making withdrawals for qualified medical expenses. 
  3. The Balance Rolls Over Annually. Your HRA balance doesn’t expire, allowing you to use the rest in later years. So if your health was good last year, but you experience a new illness this year, your HRA surplus helps pay for unexpected doctor’s appointments, treatments, or hospitalization. 
  4. You Can Use HRA Money for Many Things. HRAs have the most comprehensive list of qualified medical expenses. That includes (but isn’t limited to) medical bills and dental and vision expenses.

Disadvantages

Although HRAs are a boon to employee health care protection, they have limitations too.

  1. You Must Have Health Insurance to Use the HRA. If you opt out of buying health insurance coverage, you’re not eligible to use an HRA.
  2. Your Plan Determines Qualified Medical Expenses. Your company’s HRA plan may cover things that other companies’ plans don’t. Check with your HRA administrator for a list.
  3. You Lose HRA Funds if You Leave the Employer. If you separate from the employer, you lose all funds in your HRA account. So if you’re planning a change, exhaust your HRA funds before departing.
  4. Your Employer Determines the Contribution Amount. Some employers opt for lower-cost group plans that force the employee to shoulder more financial responsibility. If the HRA contribution amount is low, the health care program may not offer the employee much protection.
  5. Employees Cannot Contribute to their HRA. Unfortunately, you cannot contribute part of your paycheck to your own HRA. Only HSAs and FSAs permit employee funding.

Health Reimbursement Arrangement FAQs

HRAs are great supplements to health insurance, but you probably have more questions. These answers will clear things up.

What Health Care Expenses Do HRAs Cover?

HRAs cover various costs not usually covered by health insurance, like:

  • Routine doctor’s visits and copays
  • Medical bills, including hospital stays
  • Deductibles and coinsurance amounts
  • Hospital copays and expenses
  • Prescription medication
  • Over-the-counter medicine
  • Vision care (exams, glasses, contacts, and corrective surgery)
  • Diabetic supplies (testing kits and blood glucose monitors)

These are just a few of the circumstances HRAs can cover. Some plans also include:

  • Monthly premium payments toward health, vision, and long-term care insurance
  • Acupuncture and chiropractic treatments
  • Dental treatments and orthodontics (not premiums)
  • Speech therapy
  • Mental health care, such as talk therapy and alcoholic and drug addiction treatment
  • Weight loss programs
  • Service animal acquisition, care, and training

Since covered items vary among companies, check with your employer for more details about qualified medical expenses.

What Health Care Expenses Do HRAs Not Cover?

Essentially, HRAs only cover expenses directly related to treating a medical condition. 

For example, HRAs will not reimburse you for gym memberships, child care, cosmetic procedures, marriage counseling, feminine hygiene products, and funeral expenses.

What Happens to Unused HRA Funds at the End of the Year?

Fortunately, HRAs roll over funds from one year to the next if you don’t use them. So healthy people can save HRA funds for a catastrophic health emergency.

However, if you change companies, your HRA balance returns to your employer.

Can I Get an HRA if I Don’t Have Health Insurance?

No, you must have health insurance to get an HRA. Either enroll in the employer’s group health insurance plan or a marketplace policy to be eligible for HRA benefits.

Can I Cash Out an HRA?

No, you must use all HRA funds for qualified medical expenses. You can only access the HRA funds by submitting a reimbursement request to your HRA plan. If you leave your employer, they retain your HRA balance.

What Happens to an HRA When I Leave a Job?

Because your employer paid for 100% of your HRA contributions, the money stays with them if you leave your job. Find a way to use up the HRA balance if you plan to change employers.


Final Word

A health reimbursement arrangement is basically free money your employer gives you to spend on medical fees. The HRA funds are tax-free for you and tax-deductible for them. 

HSAs are straightforward to use with your health insurance plan. For example, suppose you visit the doctor, then receive a $100 invoice two weeks later. You would pay the bill, submit your payment to your HRA program, and they would reimburse you for $100. 

Another critical point is that the detailed list of covered expenses depends on your employer. Still, HRAs have the most generous reimbursement list of the three types of health accounts. 

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Alyce Meserve writes about personal finance, retirement, insurance, travel, making money, credit cards, and more. When she’s not sharing personal finance strategies, you can find her on a cruise or writing about one, hanging out with her American Eskimo Dog, Casper, taking a road trip, and playing video games. Reach her on Instagram @alyce.meserve.

Source: moneycrashers.com

Where to Find Low-Cost and Free Mental Health Services

When you have poor or no health insurance, you might prioritize other issues over mental health care. A single session with a therapist could cost $100 to $300 or more, which can be a major burden — or just an impossible cost — for a lot of people.

This could mean ignoring undiagnosed issues or skipping treatment you know you need. Even if you don’t suffer from mental health issues, you might neglect your need for support through a major life event when you see the cost of therapy.

As with any physical ailment, not seeking mental health care could be detrimental to your health in the long term, so we want to help you find the care you need with whatever resources you have.

12 Ways to Find Free or Low-Cost Mental Health Services

Instead of forgoing care or winding up in debt over medical bills, try these options to find affordable or free counseling and other mental health care services.

1. Find a Training Clinic

Like other areas of health and medicine, students need to practice working with the public before they become clinical or counseling psychologists.

That’s good news for any of us who want to save money on therapy.

Training clinics are usually located near or as part of universities. You’ll attend sessions with a graduate student supervised by a licensed psychologist. These clinics typically charge on a sliding scale (which could be as low as $0, if that’s where your scale slides…)

To find one near you, you can browse the Association of Psychology Training Clinics for member clinics. Or just search “[your city] psychology training clinic.”

2. Visit a Community Mental Health Center

Community mental health centers may offer access to support groups, individual counseling or resources to learn more about your mental health concerns.

Find a center through the Department of Human Services at your state’s government website.

You can also find services through private nonprofit organizations. YMCA offers low-cost and sliding scale behavior health and family services for kids and adults. Look for counseling and mental health services through your local Y.

3. Attend a Support Group

While you miss out on the personalized care and complete anonymity of private sessions, support groups can be the perfect solution for free or low-cost therapy.

Organizations like the Depression and Bipolar Support Alliance (DBSA), the Anxiety and Depression Association of America (ADAA), Alcoholics Anonymous (AA) and Narcotics Anonymous (NA) host free community support groups in person or online.

If you want to work with a particular therapist but can’t afford private sessions — because you lost insurance coverage, for example — ask if they offer group sessions. These should come at a lower rate you could potentially afford out of pocket.

4. Negotiate and Ask for Discounts

You might not realize it, but your medical bills are totally negotiable. By a lot.

Don’t be afraid to lowball here — this isn’t a business deal, so you don’t have to worry about making a bad impression.

When you receive a bill for services, contact the provider to simply let them know you can’t afford it. They may be willing to cut the cost by more than half if you can pay a chunk upfront.

If you don’t have the cash handy, ask for a payment plan. Get on it before the bill goes to collections, and ask for a monthly payment you can handle.

This illustration shows someone seeing a therapist online.
Getty Images

5. See a Therapist Online

Telehealth (or telemedicine) is convenient for a lot of people and could save you a ton of money on health care.

Through an app like Teladoc, you can meet with a health care professional for physical or mental health issues for a fraction of the cost — and time — of a trip to the clinic. Telemedicine doctors can diagnose, recommend treatment and even prescribe medication if necessary.

Or opt for a subscription to a therapy app like Talkspace or BetterHelp. You get access to a licensed therapist via audio or text messaging, or live video chat for around $60 to $150 per week, paid monthly.

6. Lean on Your Spiritual Community and Leaders

If you’re involved with an organized religious group, you could find the help you need within that community.

Does your organization host free support groups or retreats where you can connect with others in your situation? Maybe your minister or other leaders in the community offer free individual or couples counseling.

If you’re worried about opening up about your struggles within a small community, remember: Everyone coming to group therapy is looking for help, just like you are.

7. Use Services at Your School or College

College or university students and faculty often have access to health care services through their schools. Your tuition and fees subsidize them, so you might as well take advantage!

Children enrolled in a K-12 school may have access to sessions with a school counselor, as well. Lean on these options when your family can’t afford private mental health services.

8. Consult the Internet

Going online to self-diagnose your ailments is no replacement for professional diagnosis and treatment.

But if you already know what you’re dealing with, consulting a relevant association’s website could help when you have questions and lack access to a doctor.

For example, if you suffer from anxiety, you can find reliable resources at these websites:

Some people also find online forums like Reddit (content warning: suicide) or Facebook groups useful for connecting with other people who understand your situation.

Just be careful to take suggestions from random individuals with a grain of salt, and never rely on them for a diagnosis or medical advice

9. Call NAMI

If you prefer to speak with someone directly, you can call the NAMI Helpline (National Alliance on Mental Illness) to get answers about symptoms, treatments and resources. The Helpline itself doesn’t offer counseling, but it can help you connect with programs in your area.

10. Check Your Employee Benefits

Some companies and government agencies offer something called an employee assistance program (EAP), which could cover some free counseling sessions, among other benefits.

Check with an HR representative to learn whether your organization offers this kind of benefit and ask how you can take advantage of it.

In some cases, the available counselor is someone working as a consultant with your company and may consult with company leadership as well as counseling employees. They’re likely bound by certain confidentiality requirements, but if you have any concern about your privacy in the workplace, state those requirements in advance.

11. Stop by an LGBTQ Center

If you’re seeking safe and affirming support as an LGBTQ person, look for local LGBTQ centers and support or advocacy organizations. They might offer support groups, access to counseling or resources for LGBTQ-friendly care.

You can search “LGBTQ center in [your city or town],” or browse these resources:

  • The U.S. Department of Health and Human Services shares a list of LGBTQ support and advocacy groups.
  • The Trevor Project, focused on LGBTQ youth support, offers a crisis line you can call, text or chat online with. It also offers text, chat and phone counseling.
  • Find a PFLAG chapter near you for support for LGBTQ people, friends and families.

12. Join a Therapy Collective

Open Path is a nonprofit psychotherapy collective that offers low-cost counseling for people with financial need.

You can join the collective for a one-time fee of $59, then receive care for between $30 and $60 per session (up to $80 for couple and family sessions).

The collective lets you search for therapists in your area or speak with someone online, so you should be able to find the help you need no matter where you live.

OpenPath doesn’t require income verification for membership, but it asks that you only use the service if you’re uninsured, underinsured, have a household income less than $100,000 a year or otherwise can’t cover market rates for therapy.

Source: thepennyhoarder.com

Home Birth vs. Hospital Birth Costs – Is Natural Birthing with a Midwife For You?

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When preparing to have a child, it’s crucial to consider the financial aspects. It may not be as costly as financing an adoption, but pregnancy and childbirth bring a financial burden. And the total cost largely comes down to whether you choose a home birth or hospital birth. 

As soon-to-be parents, you naturally want to make the choice that gives your baby the greatest chance to survive and thrive. However, the cost of giving birth in the United States is high, and health insurance plans are complicated. 

While there are many personal and emotional reasons to choose home or hospital birth, you must also consider the financial implications.   

Home Birth vs. Hospital Birth Costs 

When deciding between giving birth at home or in a hospital, look at the cost of having a baby in either situation. Four primary factors are involved: pregnancy and prenatal care, labor and delivery, a hospital stay, and postpartum care. 


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Home Birth Cost Factors

Home birth seems like it should be less expensive than a hospital birth. But the costs can add up quickly if you go in unprepared.

Insurance Coverage for Home Births

Some states’ insurance allows coverage for home births — but not all of them. As of May 2020, only 21 states covered home birth under the Medicaid program, for example. 

As you’re preparing, a couple of things are essential: asking your insurance carrier what types of birth they cover and ensuring you choose something that fits the bill. Some insurance companies may only cover a home birth with a certified nurse-midwife attending, while others may only cover a midwife if you give birth in a birthing center. 

So it’s key to communicate clearly with your insurance provider. Find out what your out-of-pocket costs are for any deviations from their typical requirements. 

Home Birth Prenatal Options

Home birthers typically receive a similar level of prenatal care as those having a hospital birth. However, when you decide on a home birth, you might work closely with a midwife, doula, or both. Each birth assistant has different roles and responsibilities.

  • A doula is a guide who provides physical and emotional support before, during, and after childbirth. They may be doula-certified, but they are not necessarily medical professionals. 
  • A midwife is a trained professional who assists healthy individuals in childbirth and provides prenatal and postnatal care. Training varies, but certified nurse-midwives have completed a training program, making them the safest (and most expensive) option.

Doula and midwife fees vary greatly based on geographic location and services provided. It’s usually more expensive in cities and higher-cost-of-living areas. 

For example, in a large city in the Dallas-Fort Worth, Texas, metro area, you can find doula packages ranging from $1,600 to $2,500. But in a significantly smaller city like Abilene, Texas, they’re less than $1,000. But going to an even higher cost-of-living area like New York City may mean a minimum of $2,000.

Typically, the doula fee includes a specific number of prenatal visits, prenatal support and information, assistance during labor and delivery, and at least one postpartum visit. Typically not included are prenatal vitamins, any required lab work, or any type of hospital visit. 

Midwives are generally more expensive. Because of the wide variance in things like certification status, it’s hard to put a solid number on midwife costs. But expect to pay on the high end of doula costs at a minimum. But some midwives may charge $5,000 or more.

Note that the fees for doulas and midwives may not include necessary medical exams like regular OB-GYN visits and ultrasounds. And those cost just as much as they would for a hospital birth if they’re not included as part of your package (some midwives and doulas work with OB-GYNs).

You also need prenatal vitamins, which are relatively inexpensive. For example, many prenatal vitamins range from about $0.08 to $0.48 apiece at Walmart. Over nine months of pregnancy, that’s only between about $20 and $130. Fortunately, you don’t need a prescription, so there’s no added cost for a doctor’s visit.

Home Birth Labor & Delivery Costs

Fortunately, if you’re electing for a home birth, you’re skipping one of the most significant expenses associated with childbirth: the hospital stay. That’s a major benefit many expectant parents appreciate about the home-birth option. Ideally, you’d incur zero hospital costs. 

And doula and midwife packages typically include labor and delivery. 

A midwife will usually provide equipment like IVs, sterile gloves, gauze pads, a thermometer, and waterproof bed covers. You may want to ask your midwife just to be sure, though. Doulas may provide some of this equipment, but they’re not authorized to insert IVs unless they’re also medical professionals. 

You may also have to purchase special equipment if your doula or midwife doesn’t provide them. Costs vary, depending on the types of supplies you need. 

Even if your midwife or doula doesn’t provide them, simple items like waterproof mattress covers cost under $40 on Amazon. But if you need a birthing tub, you’re looking at $100 or $200 and up at a retailer like Oasis or La Bassine. You can also look into renting one, though you may not save much money if you need to keep it for several weeks.

Fortunately, midwife and doula fees include some services hospitals may ask you to pay for, such as facilitating skin-to-skin contact. Even if it doesn’t cost much, it’s annoying to pay to hold your own baby.

If your home birth expenses come down to just a few thousand dollars paid to a midwife, that may sound like a simple decision from a financial standpoint. 

But you need to consider the safety of both the mother and baby. The infant mortality rate for babies born at home is several times higher than the rate of babies born at hospitals, according to a 2010 to 2017 study featured in the American Journal of Obstetrics and Gynecology. 

And just because you plan to give birth at home doesn’t mean it will turn out that way. So plan your ideal situation and have a Plan B in case complications arise. Have enough money saved for a hospital stay for both Mom and Baby. If things go smoothly, just add it to Junior’s college fund.

Postpartum Care After a Home Birth

Most doulas and midwives include some form of postpartum support and care in their packages. Your specific agreement may vary, but it’s fairly standard to offer at least one postpartum checkup. (Babies should see a pediatrician for their post-birth care.) 

Those with postpartum depression or psychosis must seek mental health treatment from a source other than their doula or midwife unless they’re also qualified therapists. That treatment may include talk therapy, medication, or a combination of the two.

You may also wish to seek the advice of a lactation consultant. Most midwives and doulas are trained to help, but a board-certified lactation consultant may provide further assistance if you need it. A home visit can be around $200 or more per hour, depending on your location. 

Insurance may cover some of these costs, but you can also get free online assistance at La Leche League. 

The U.S. Department of Agriculture also offers WIC breastfeeding support. Online resources are freely available to anyone, though you must qualify for the Special Supplemental Nutrition Program for Women, Infants, and Children to get personalized support. Your local health department may have resources as well.


Hospital Birth Cost Factors

Hospital births are often more expensive than home births, but that may not necessarily be true. In general, insurance covers hospital births more thoroughly than home births, meaning a home birth could lead to higher out-of-pocket costs. 

But a hospital birth costs considerably more than a home birth unless your insurance covers the majority. Know what your insurance pays for and what it doesn’t. 

Hospital Birth Insurance Coverage 

Under the Affordable Care Act (ACA), pregnancy, maternity, and newborn care are essential benefits that qualified health plans must cover. That said, if you’re a dependent on a parent’s or guardian’s policy, coverage may vary, so look into that sooner than later.

Note that its status as an essential benefit doesn’t prevent insurers from charging copays, coinsurance, or deductibles, so that doesn’t necessarily mean insurance covers the full cost.

But if you’re tempted by a home birth only for the cost savings, your insurance could drop the amount for a hospital birth to a very comparable number. So check into your coverage and do the math.

Some policies cover prenatal care at a higher level than others. Additionally, high-risk pregnancies require a greater level of care and could cost more, even with insurance. But you should likely opt for a hospital birth anyway.  

Whatever type of insurance coverage you have, know how much your deductible is, the length of hospital stay covered, and what doctors and hospitals are in your network to achieve maximum coverage. 

Additionally, if you require prenatal tests your insurance doesn’t cover, be mindful that you may incur those costs and can ask your doctor how much they are. For example, not all plans cover genetic testing.

Fortunately, there’s a cap on how much you can pay out of pocket on all medical care each year. On the most affordable Bronze level ACA insurance plans, the maximum individual out-of-pocket cost in 2022 is $8,700 for in-network medical services for an individual ($17,400 for a family). The max gets lower as you buy more expensive plans.

However, your pregnancy will last around nine months, meaning you could easily straddle two plan years, making the maximum overall individual out-of-pocket potential on the lowest plan $17,400. So that’s another factor to consider.

If you don’t have health coverage through an employer or your spouse, go to Healthcare.gov to see if you qualify for a special marketplace enrollment period based on a qualifying life event, such as losing your employer-sponsored health benefits or changes of state of residence.

While pregnancy is not a qualifying life event, it may give you access to programs like Medicaid or the Children’s Health Insurance Program (commonly known as CHIP). And even if you only qualify for open enrollment toward the end of your pregnancy, it can still save you significant cash.

Hospital Birth Prenatal Care Options 

The Kaiser Family Foundation says prenatal care totals an average of about $2,000, including about 12 doctor’s visits at $100 to $200 each if you don’t have ACA-compliant health insurance.

Hospitals also often provide free childbirth and infant care classes, so take advantage of those opportunities, especially if you’re a first-time parent. 

Your obstetrician will recommend prenatal vitamins and other preventative strategies to ensure your and the baby’s health throughout the pregnancy. The vitamins cost the same as they would for a home birth at around $21 to $130 for the whole pregnancy unless your doctor prescribes something special. 

When charged separately, ultrasounds range in cost from an average of $319 in New Jersey to $2,295 in Florida, according to a 2021 survey by Hospital Pricing Specialists. The national average cash price for an ultrasound came out to $745, so research prices in your area carefully.

General office visits to your obstetrician during pregnancy run about $207 if out-of-network or uninsured and $105 if insured and in-network, according to Fair Health Consumer. 

Prenatal care packages at hospitals and birthing centers typically detail how many visits and ultrasounds they include and what types of additional care they offer, which can save you money on those costs. But if you have insurance, ensure your plan covers a package before you buy it.

Hospital Birth Labor & Delivery Costs

Despite the cost, there are advantages to a hospital birth. It allows you to have an epidural, even if you initially planned against it. Epidurals will put the cost of a vaginal birth toward the upper range of any uninsured rate estimates. 

At the hospital, you can choose a cesarean delivery if it becomes medically necessary (even a certified nurse-midwife cannot legally perform a C-section). 

And that’s important because the type of delivery you have can also influence the cost. For example, health care cost transparency advocate Fair Health Consumer states that the national average charge for a vaginal delivery is $12,290. The national average charge for a C-section is $16,907. (That’s as of 2018.)

But those are just averages. How much it truly costs varies widely based on where you live and what services you want or need. 

For example, Fair Health Consumer puts the average uninsured cost of a vaginal delivery with pre- and post-delivery care in New York City’s priciest Manhattan zip code at between $12,380 and $24,666, depending on the specific care you need. But in Boise, Idaho, it’s only $4,180 to $16,269.

Note that those numbers don’t include prenatal or newborn care, which Fair Health Consumer shows comes in at several hundred (potentially close to $1,000) dollars per day, assuming there are no complications.

The Fair Health Consumer site can give you a ballpark idea of how much you’ll pay if you search based on your specific location.

Skin-to-skin contact is another aspect of the birth experience that might incur a charge. Although it may seem silly, after a surgical birth, the mother may be unable to safely hold her baby, making it necessary to have an additional nurse on hand to assist her.

Most hospitals allow parents and babies to have skin-to-skin contact as a matter of routine, but it never hurts to ask. It’s unclear what the average cost is, but the charge that went viral was $40. 

Postpartum Care After a Hospital Birth

If you’ve chosen a hospital birth, you should have plenty of help in the realm of postpartum care. Most hospital birthing packages include at least one follow-up visit soon after the baby is born. You should take the baby to a pediatrician for their follow-ups, which is an entirely separate charge.

If you experience a high-stress birth, such as having emergency surgery, you will need greater care in the following days and weeks. It may be as simple as family members assisting you after the cesarean procedure so you don’t overexert yourself. But it could be something more costly. 

Even if the delivery went smoothly, your OB-GYN will screen you for potential post-birth issues, such as postpartum depression. Postpartum depression could lead to serious expenses. Insurance should cover much of the cost of treatment, but if you’re uninsured, the rates can rack up fast.

In most areas of the country, one session with a psychologist runs between $100 and $200. It’ll cost even more if you need to see a psychiatrist (a medical doctor who can diagnose and treat mental disorders and prescribe medication). Rates per session are similar to a psychologist’s, but an initial visit could be $300 to $500.

Postpartum care may also include physical therapy and pelvic rehabilitation to help restore pelvic floor muscles. The cost for these can vary by location, but expect to pay between $150 and $400 per 45- to 90-minute session.

Many mothers also seek lactation assistance. It can save money in the long run if your baby breastfeeds instead of needing formula, so the investment in a consultation (around $200 per hour) can be well worth it. 

But you might get plenty of lactation help through your hospital as well. Some offer one or more free sessions initially and quite reasonable follow-up visits. For example, Baptist Health of Lexington, Kentucky, offers one free lactation consultation and follow-up visits for $25. 

And you have the same free or low-cost options as you would for a home birth, including the La Leche League, WIC breastfeeding support, or your local health department. 


The Verdict: Should You Choose Home Birth or Hospital Birth?

Overall, home birth costs are typically lower than those of hospital births. But the decision-making process isn’t as simple as looking at the numbers. 

It doesn’t help when you consider that hospitals negotiate rates based on factors like a patient’s insurance, whether you pay in cash, or whether you’re out of network. It’s tough to know the “official” cost of childbirth.

But there are things you can consider to help you make the decision.

A Home Birth Makes Financial Sense If…

Finances shouldn’t be the only reason you choose a home birth. But they can play a significant role in your decision. A home birth makes financial sense if:

  • You Need to Save Money. Home births are often cheaper. But if possible, don’t allow money to be the sole deciding factor in your birth plan. You must also consider your and your baby’s health and safety and your personal preferences. 
  • You Don’t Have Any Health Risk Factors. If you don’t have underlying risk factors like obesity or diabetes that could put you or your baby in danger, a home birth is less likely to result in emergency hospital expenses. 
  • You Have a Solid Backup Plan. Even if you don’t have risk factors, you need to prepare for an emergency hospital trip. That means setting up an emergency fund. If you don’t use it, you can spend it on the baby or set up a college fund.
  • You Live Near a Hospital. Don’t plan for a home birth unless you can get to a hospital quickly if something goes wrong during delivery. Emergency care will probably be more expensive than a hospital package, especially if you have to be air-lifted.
  • You Have a Trusted Midwife and Amazing Support Team. A doula or midwife with solid credentials (ideally a certified nurse-midwife) can save you money by providing similar care for less money, working with (not against) your medical team, and calling for medical intervention as early as necessary.
  • Your Insurance Covers Home Births. If your insurance covers home births, crunch the numbers to determine how much it can save you. While home births are already cheaper than hospital births, insurance can make it even cheaper.
  • You Don’t Have Insurance. If you’re uninsured, a home birth can save you a ton if you’re healthy. But it’s still a gamble. Complications could land you in the hospital anyway. It may be better to see if you qualify for open enrollment or wait until you do to try to become pregnant.

A Hospital Birth Makes Financial Sense If…

There are some circumstances in which a hospital birth is the best choice. In fact, medical professionals overwhelmingly recommend hospital births. Regardless of the cost, you should have your baby in a hospital or birthing center in the following situations. 

  • You Prefer the Greatest Level of Access to Medical Care. Opting for a hospital birth means having licensed OB-GYNs available on-site and top treatment and surgical options. Many things can impact labor and delivery, and the hospital can provide access to a C-section and pain medication as needed.   
  • Your Insurance Has Better Hospital Birth Coverage. Insurance can make hospital birth competitive with home birth. And you can always have a midwife or doula with you in the delivery room. 
  • You Have Contraindications to Home Births. If you have risk factors like diabetes or obesity, are carrying multiples, have had a prior cesarean delivery, or there are any issues with the fetus, plan a hospital birth. Home birth won’t save you money if you have to go to the hospital anyway, and it’s safer to be there from the beginning.

Both Make Financial Sense If…

Both home and hospital birth can be a high-quality childbirth experience as long as you have top-notch care. Choose the one that makes the most sense to you in these situations.  

  • You Have a High Income. If your household income is high enough that the cost difference between a home and hospital birth doesn’t matter, go with your preference. 
  • Cost Is Equal in Both Situations. Some people will find that the financial cost of using a midwife to facilitate a home birth is quite comparable to that of a hospital birth. If the cost is similar for both options, go with your personal preference. 
  • You Want the Best of Both Worlds. A hybrid approach in which you do much of the laboring process at home and then move to the hospital as labor progresses may lessen the amount of time spent in the hospital since early labor can be quite a long ordeal. 

Final Word

The choice between home birth and hospital birth isn’t purely a financial issue. 

A home birth has other distinct advantages: the potential for greater freedom in choosing your birth plan, a more intimate experience, and a more comfortable environment in which to bring your baby into the world. 

If you’re underinsured and worried about the costs of a hospital birth, in some situations, a home birth can be a safe alternative, especially if you’re healthy and build your emergency fund to cover unexpected hospital expenses. 

On the other hand, hospital births are safer, and infant mortality is much lower. You have access to more advanced care and licensed physicians, which can bring immense peace of mind during what can be a very uncertain and emotional few days. And insurance coverage can help lower hospital costs, even if you need a C-section.

Overall, the decision is an important and personal one. Examine your insurance coverage to help you evaluate the options and choose the right birth plan for your family.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Kate Underwood is a former high school French and English teacher who has turned her obsession with personal finance into a career. Her work is featured at Money Crashers and elsewhere on the web, covering side hustles, debt payoff, investing strategies, and more. She loves making finance more accessible to everyone. In her free time, she loves to hike and hang out with her husband and kids.

Source: moneycrashers.com

How to Earn Money Renting Your RV – Rent Out RV, Profit, Repeat

You love your RV. But chances are, you’re not using it every day of the year. In fact, there are more than 18 million RVs in the U.S, that sit idle for 350 days out of the year. Not only that, but RVs are often the second-most expensive purchase Americans make outside of their home.

If you’ve got a road-ready RV sitting in storage or in your driveway while you make payments on it, you have an opportunity to offset that major expense and let it pay for itself. We’re talking about renting it on an RV rental marketplace like Outdoorsy.

Years ago, homeowners couldn’t fathom allowing “strangers” to rent out their homes. The same way homeowners found online vacation rentals a lucrative and safe enterprise, Outdoorsy is proving that RV rentals can deliver similar success.

RV owners are making up to $50,000 annually by renting out their travel trailers, campers, conversion vans and luxury motorhomes on Outdoorsy.

Entertain the question for a moment and learn just how much you can make by renting out your RV to vetted and verified renters who share your passion for the RV lifestyle and the great outdoors.

How Much Money Can You Make Renting Out Your RV?

No doubt, there’s more to renting out your travel trailer or conversion van than simply listing your property online, accepting a reservation and swapping your keys for money.

Outdoorsy is built on trust. And thoughtful assurances, at every level, are what make that trust rock solid.

Every prospective renter on Outdoorsy has their driving record verified, so you know your RV will be in safe hands with a strong track record of defensive driving.

And then there’s trip insurance, up to $1 million in coverage, and roadside assistance, both of which help strengthen the trust between owner and renter.

Once you account for the insurance costs, listing and reservation fees and driver background checks, RV owners take home about 80% of what renters pay for the pleasure of renting your RV.

Here are some estimates on how much you could make by renting out your RV for just one to two weeks:

  • Class A: $2,569 – $5,138
  • Class B: $1,624 – $3,248
  • Class C: $1,540 – $3,080
  • Camper van: $1,204 – $2,408
  • Truck camper: $875 – $1,750
  • Travel trailers: $693 – $1,386
  • Folding trailer: $490 – $980
  • Fifth wheel: $1,113 – $2,226
  • Toy hauler: $770 – $1,540
  • Passenger van: $420 – $840

RV owners can make even more than these estimates if a renter exceeds your mileage or generator restrictions. Outdoorsy accepts even more RVs than those listed above — anything from conversion vans to luxury motorhomes.

You’re paid handsomely for every little bit of wear and tear your RV could potentially sustain for everyday use and insurance protects your property from abuse.

It’s free to list your RV on Outdoorsy. They won’t charge you anything until a renter pays to rent out your RV.

How to List Your RV and Start Earning

Creating a listing is simple, and there will likely be strong interest when you do set out in the RV rental business. But creating a great listing takes a little bit of effort and will be worth your while when renters start to rate the experience.

Signing Up

It’s not a commitment to anything. Signing up for Outdoorsy only indicates you’re open to learning about what could come next.

You’ll need to supply your name, email address and your contact number. You can sign up in a web browser or download the Outdoorsy app.

Creating Your Listing

Outdoorsy will do its part to ensure you can trust renters. With your listing, you’ll have to do your part to attract renters and help them understand just how great of an opportunity renting your RV will be for them.

Take photos showing off your RV. Staging your photos is fine, even encouraged, as it’ll help renters start to daydream about it. You can select the amenities your RV offers and Outdoorsy will compile them on your listing.

You’ll also need to establish your rules for your RV: how many miles they can put on it, the types of places they can take it, how much they can use the generator and so on.

Accepting Reservations

You are never obligated to accept any reservations. But if you’re still nervous about handing over the keys, it gets a lot easier each time.

Also, it’s perfectly acceptable to throw a few questions at potential renters before accepting their booking requests to rent out RV time from you.

Preparing for the Next Renters

More than just removing personal belongings, you’ll want to make sure your RV is clean and is road ready. Your renters will do the same for you when they return it — neither side wants to clean up after the other.

Swapping the Keys for Money

It’ll be back before you know it, and in as good a condition as you remember. The last thing a renter wants is to be liable for insurance costs.

You get to determine where you’ll meet renters to drop off the keys and where they’ll have the RV delivered. But remember, going the extra mile to accommodate your guest will probably earn you rave reviews and will ultimately help attract even more guests.

Getting Paid

Once the key exchange is done, you’ll be paid through Outdoorsy about 24 to 48 hours later. Your bank may take the usual three to five business days to update your ledger, however.

Outdoorsy won’t charge you a dime until a renter has paid to borrow your RV. Once Outdoorsy is paid, they’ll collect insurance and other fees before initiating your payout.

How Insurance Works

If you’ve ever thought about renting out RVs in the past, you were probably dissuaded by your insurance policy’s commercial exclusion clauses and RV rental restriction.

Nearly all RV insurance policies rule out renting out your RV.

Episodic Insurance built into the Outdoorsy Platform

Roamly’s  “episodic” insurance coverage begins covering your RV from the moment you hand over the keys to the renter until the moment you get them back. The renter must purchase Roamly’s episodic insurance as part of the RV booking process, ensuring that the renter, and your RV, are protected on the trip.

This comprehensive policy comes with up to $1 million in liability coverage for each trip.

Personal RV Insurance with No Commercial Exclusions

While your RV is protected through Roamly’s episodic insurance when it’s being rented out, you’ll want to make sure that your RV insurance carrier even allows you to rent it out in the first place. That’s where Roamly’s personal lines of insurance can help.

Roamly’s RV policies explicitly allow you to rent out your RV when you’re not using it by removing the commercial-use restriction found in traditional RV policies. While other carriers will deny legitimate claims or drop your coverage if you rent out your RV, Roamly won’t. In fact, Roamly encourages it, and it offers unique premium discounts the more you rent out your RV on Outdoorsy.

And yes, you really can save up to 25% in many cases by switching over to Roamly, an insurance company that was built by RV enthusiasts just like you.

To see how much Roamly could save you, get a quote here. It takes just 60 seconds and can be done completely online.

Get Paid to Share the RV Lifestyle

People don’t just want to see our country’s National Parks and scenic drives, they want to savor them through immersive experiences that a car or SUV just can’t accommodate.

Ready to rent out your RV? Even if you aren’t quite ready, joining the Outdoorsy community is the next step and it’s completely free.

You can learn from other RV owners who are using extra income from Outdoorsy to pay for their grandkids’ tuition, pay for home improvements or cover all the expenses for their next big adventure.

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Source: thepennyhoarder.com

How Much Does It Cost to Adopt a Child?

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Additional Resources

Adoption is a life-changing journey. Whether the choice to adopt comes after years of expensive infertility treatments or is a route you’ve always wanted to take, the choice to welcome a new family member is rarely a financial one, but rather a decision of the heart.

But at some point, prospective adoptive parents have to consider the costs. It’s unlikely your decision to adopt will boil down to numbers. But it helps to know what to expect. 

The figures can vary depending on your adoption journey, from almost nothing to upward of $70,000. But you can use them as a baseline to help you financially prepare for starting a family and to make an informed decision about which type of adoption makes the most sense for you.


How Much Does It Cost to Adopt a Child?

There are three basic types of adoption: domestic infant adoption (sometimes called private adoption), international adoption, and public adoption. 


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But if you’re looking to adopt a baby, private and international adoption are the only two real options. Because of the way the foster care system operates, it’s exceedingly rare to be able to adopt an infant through public adoption. Their primary goal is reunifying families whenever possible, which can take years.     

But regardless of your adopted child’s age, some costs are common to all three, such as the expense of a home study, which involves visits by a social worker and background and financial checks. Other costs are unique to the adoption route you choose, such as the travel expenses involved with international adoption.

And the costs vary wildly, so it’s crucial you understand the ins and outs of each adoption type.


Domestic Infant Adoption

When adopting a baby in the United States, you have two options: adopting through an agency or independent adoption.

Costs of Adopting an Infant Through an Agency: $25,000 – $70,000 

Adopting through an agency is more expensive, but there’s also a higher success rate. Also, some agencies offer a sliding scale for those who need help affording adoption, which can potentially save you a few thousand dollars, depending on your income. However, each state has its own laws that regulate adoption fees, including sliding scale fee structures. 

Average Costs of Domestic Agency Adoption

Agency Fees $15,000 – $45,000
Legal Fees $2,500 – $6,000
Birth Mother Expenses $4,000 – $16,250
Home Study Fee $2,750

Adoption agencies are typically full-service operations. Thus, their fees generally include everything involved in the adoption process, which can be complex. The journey to bring a child home involves many parties, including attorneys, social workers, physicians, counselors, government administrators, and adoption specialists. 

There are also costs associated with matching birth parents and adoptive parents. For example, there are advertising expenses to find expectant mothers. And then there are medical expenses and court costs to ensure the health of the mother and child during pregnancy as well as the safety and security of the child after placement.

When you adopt through an agency, it typically completes the entire process from beginning to end, hence the expense. 

Adoption agencies that charge more include more services. For example, if you find an agency with fees at the lower end, it’s likely because their fee doesn’t include the costs of hiring an attorney, unlimited advertising for birth parents, certain birth mother expenses, or adoption disruption insurance (a guarantee you won’t lose your money if the birth mother changes her mind).

So always ask for a written, line-by-line breakdown of the agency’s costs to see what services its rate covers before signing with it. 

Costs of an Independent Adoption With an Attorney Only:  $10,000 – $40,000

If agency adoption is too expensive but you’d still like to adopt a newborn, you can save a lot of money by hiring an attorney to facilitate an independent adoption. Independent adoption happens when prospective parents locate a birth parent on their own and use an attorney to process the necessary paperwork.

Average Costs of Independent (Attorney) Adoption

Legal Fees $3,000 – $6,000
Advertising Fees $0 – $1,000
Birth Mother Expenses $6,000 – $30,000
Home Study Fee $1,000 – $4,000

The cost of an independent adoption can range from $10,000 to $40,000, though it could go higher based on your circumstances. The final bill depends on how much you need to spend to find an expectant mother and how much you pay for medical and living expenses, which may be regulated by state law. 

Further, adopting independently is a bit like trying to sell a house without a realtor. You must find a birth mom on your own, which means advertising for and vetting birth moms without help. 

So, while it can be cheaper, you still have to go it alone. And if you have trouble finding a birth mother, your costs can quickly add up. Agencies give a flat rate no matter how much advertising it takes. If you have trouble finding someone, you could quickly blow past the $40,000 mark.

Another reason independent adoption costs can vary more widely than those through a private agency is because in most states, adoptive parents won’t have their costs reimbursed if a birth mother changes her mind, what’s commonly called a disrupted adoption. Most adoption agencies build disruption insurance into their fee structures. 


International Adoption: $26,500 – $73,000

Those unfamiliar with the adoption process often believe it’s less expensive to adopt a child from another country. But the reverse is more often true. 

Average Costs of International Adoption

Agency Fees $15,000 – $30,000
Legal Fees $500 – $6,000
Immigration Application Fee $1,000 – $2,000
Dossier Preparation and Clearance $1,000 – 2,000
Home Study Fee $1,000 – $4,000
In-Country Adoption Expenses $2,000 – $10,000
Travel Expenses $5,000 – $15,000
Child’s Passport, Visa, Medical Exam $1,000 – $4,000

The cost of an international adoption can range from just over $20,000 to more than $70,000. The wide variance is due to the different requirements of each country. 

International adoption (also called intercountry adoption) has some similarities to domestic adoption. But it has its own unique steps and expenses that can quickly escalate beyond the cost of domestic adoption.

The costs of international adoptions can include immigration processing and court costs (both in the foreign country and the U.S.), travel expenses, foreign and domestic legal fees, foreign agency fees, passport and visa fees, medical examinations, and in-country adoptions expenses (such as foster care for the child, donations to the orphanage, and payments for the in-country adoption liaisons).

The costs also depend on whether a government or private agency, orphanage, nonprofit organization, attorney, or a combination of entities is managing the adoption. 

Additionally, some international adoptions are finalized in the child’s country of origin, while others must be finalized in the U.S., depending on the laws of your state, further adding to the total cost. And depending on the country’s regulations, you may have to plan an extended stay, which means time off work and (potentially) lost wages.


Public Adoption: $0 – $2,500

The least expensive route to growing your family is unquestionably public adoption, or adopting through the foster care system. It’s very difficult to adopt a baby, though. So this option is best for those who wish to adopt an older child.

Public adoption costs next to nothing because the government subsidizes many associated fees and expenses. 

Average Costs of Public Adoption

Agency Fees Usually $0
Legal Fees $0 – $2,000
Home Study Fee $0 – $500

Federal and state financial adoption assistance programs exist to encourage the adoption of children with special needs that make them difficult to place, such as older children, sibling groups, or those with physical or mental disabilities. 

Thus, most prospective parents who are adopting through public agencies will find their state is often willing to waive most or all of the fees associated with adopting through the foster care system, including both the home study fee and attorney fees. 

Additionally, if you become a foster parent and apply to foster-to-adopt, the government subsidizes some of your future adopted child’s living expenses while you await finalization. 

But if you have your heart set on adopting a newborn, foster care adoption isn’t the route for you. It’s nearly impossible to adopt an infant that way. 

Some babies in the foster care system were abandoned by their biological parents or taken by the state due to abuse, neglect, or drug addiction. But no child in the system — infant or otherwise — is immediately available for adoption. 

The state’s No. 1 priority is to reunite children with their biological families. That includes extensive sessions with counselors and social workers. If that effort ultimately proves unsuccessful, the state next tries to place the child with a biological relative. 

Only after these efforts — which could take several years — are children placed for adoption. Thus, by the time babies in foster care become eligible for adoption, they’re no longer babies. But if they were placed with a foster family, that family gets the first chance at adoption. 
However, if you’re interested in adopting an older child and are prepared to help them work through the trauma, the rewards can be immense. My parents adopted my little brother from foster care at the age of 6, and his presence has enriched our family in myriad ways.

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Factors That Influence Adoption Costs

Every adoption is unique, and though adoption agencies typically try to work within your budget, unforeseen costs can occasionally raise the base projected cost. And that can have a significant impact on your overall family budget.


Birth Mother Expenses

Depending on your state’s adoption laws, a birth mother may be eligible for coverage of certain expenses. You may have to pay medical expenses related to the pregnancy, including insurance coverage if she’s not already covered or eligible for Medicaid.

If you work with an agency, they should take care of helping her find coverage. But you may still be responsible for some medical expenses, such as doctor copays. Once you’re matched with a birth mother, her medical expenses become your medical expenses. 

Adoption agencies typically work these into their overall fee structure but allow for variances that could affect your cost. For example, you may pay more or less depending on what stage of pregnancy the mother’s in when the agency matches you. If you’re matched in the ninth month, there will be fewer expenses.

And if you’re adopting independently, some or all of the medical costs the birth mother incurs as a result of the pregnancy may be your responsibility as defined by the laws of your state. Consult with an adoption lawyer for more information.  

Additionally, in some states, you may need to cover other birth mother expenses. Birth mother expenses are court-approved funds adoptive families provide to help prospective birth mothers with pregnancy-related expenses. In addition to medical care, costs could include living expenses like maternity clothing, groceries, rent, and transportation. 

Some states that allow birth mothers to request living expenses cap the total amount. For example, Ohio caps the amount birth mothers can be reimbursed for living expenses at $3,000 and Connecticut at $1,500. Other states have no cap but permit a judge to set one on an individual basis. 

Thus, these expenses can vary widely from one adoption to another.


Advertising

The longer you have to wait for a birth mother match, the more money an agency must pay toward advertising to find you one. Ask the adoption agency how they deal with this variable cost. Some charge one flat fee regardless of the amount of advertising required; others set a variable cost.

And if you’re doing an independent adoption, you’ll be covering this expense on your own. If you don’t already know a birth mother to adopt from, you’ll need to find one. That means drawing on your personal connections, using social networks or community organizations, utilizing adoptive family websites, posting print ads, or seeking referrals from adoption attorneys. 

It could take a long time to find a birth mother if you don’t have extensive networking options. And that can substantially drive up your adoption costs. Depending on how long it takes you to find someone, fees for print and online advertising can range from several hundred dollars to tens of thousands. 


Attorney Fees

Lawyers are necessary for dealing with the legal aspects of any adoption. These include the original consent to adoption and termination of parental rights as well as the court proceedings to finalize the arrangement. 

However, the fees can vary considerably based on the type of adoption you opt for. Attorney fees can also vary depending on other factors, including:

  • The Complexity of the Case. Will they need to represent you multiple times in court? All adoptions must eventually be finalized before a judge. But some adoptions — such as international adoptions or those in which birth mother expenses must be court-ordered — could require more paperwork or court appearances than others.
  • The Number of Hours the Attorney Works on the Case. Lawyers charge by the hour. Even if you don’t have to appear in court more than once, adoption can involve a lot of paperwork.
  • The Number of Additional Attorneys or Support Staff Needed. Depending on the complexity of your case or who you hire, you may be represented by a law firm rather than a single attorney. Additionally, your lawyer may use a support team to fulfill basic tasks like clerical work.

Depending on your case, rates are often negotiable. And while attorneys often charge by the hour, many offer a flat fee for certain types of cases. 

For example, a family law attorney might charge a flat fee for a straightforward adoption case that requires a simple filing of paperwork and one court appearance. But they might charge by the hour for a more complex case, such as an international adoption.

Regardless, most lawyers offer payment options so clients can find an arrangement that works for their budget. And all lawyers have fee agreements informing clients of costs upfront. So ensure you thoroughly read the agreement beforehand. 


Time Off

Unfortunately, in the U.S., paid parental leave isn’t guaranteed by law, and many workplaces don’t have this benefit. Even when they do, it may not apply to adoptive parents. So check with your human resources department about whether your workplace offers adoption benefits. 

Whether your employer offers paid time off, all adoptive parents are entitled to up to 12 weeks (three months) of leave through the Family Medical Leave Act. The act equally guarantees maternity and paternity leave for biological and adoptive parents.

But it only guarantees your job and health insurance. It doesn’t guarantee paid time off. If your company doesn’t provide paid parental leave, you need to plan for lost wages.


Final Word

The costs of adoption may feel formidable, especially if you have your heart set on adopting an infant through domestic or international adoption. But they don’t have to be insurmountable.

Many resources are available to help families afford to adopt, including options for post-placement reimbursement, like the adoption tax credit. Talk with adoption professionals to explore your options before completely ruling it out. 

Also, talk with other families who’ve adopted. Many are happy to share stories of how they were able to afford adoption, especially if it helps others fulfill their dreams of a family.

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Sarah Graves, Ph.D. is a freelance writer specializing in personal finance, parenting, education, and creative entrepreneurship. She’s also a college instructor of English and humanities. When not busy writing or teaching her students the proper use of a semicolon, you can find her hanging out with her awesome husband and adorable son watching way too many superhero movies.

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Should I File a Home Insurance Claim? Pros, Cons, When It Makes Sense

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You love the big cherry tree in your home’s front yard. Each spring, it explodes in a riot of bright pink flowers. Each summer, it drops sour fruit that perks up nicely in a sugary pie. 

Until it doesn’t. One summer day, your family comes home to find one of the cherry tree’s limbs in your living room, felled by a strong thunderstorm. The damage is extensive: two broken windows, a caved-in window sill, and serious water and impact damage to the living room floor and furniture.  

Once the initial shock wears off, you prepare to file a home insurance claim. But then, you start to ask questions. What if your insurance company denies the water damage portion of the claim? What if my home insurance premiums spike? How much will I have to pay out of pocket due to your policy’s high deductible? Should I even file this claim? 


Should I File a Home Insurance Claim?

The fact that a seemingly serious event like a tree falling through your house is such a close call teaches us an important lesson about homeowners insurance: It’s not always in your best interest to file a claim. Even when they cause short-term financial pain, some incidents aren’t worth filing over. 


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Plus, standard homeowners insurance policies exclude certain types of incidents that can cause serious financial stress for homeowners, such as floods and earthquakes. You need separate insurance policies if your home is at risk of these uncovered perils.

Pros & Cons of Filing a Homeowners Insurance Claim

If you’re considering filing a homeowners insurance claim, you’re probably facing a hefty bill for cleanup and repairs or a long list of damaged items to replace. Or perhaps you’re staring down a lawsuit brought by a guest or worker who sustained serious injuries on your property.  

In any case, you need to figure out whether it makes sense to go through with your claim — and fast. That means objectively assessing the pros and cons of doing so.

Pros of Filing a Home Insurance Claim

Depending on the circumstances, filing a home insurance claim has significant financial benefits.

  1. It Helps You Pay for Repairs. If your claim is approved, you can use the payout to offset the cost of repairs and restore your home to its previous condition. Without this financial assistance, you might find yourself cutting corners or making ill-advised financial moves to cover the cost, such as dipping into your 401(k). 
  2. It Helps You Replace Damaged or Stolen Goods. Your homeowners insurance policy could help offset the cost of replacing possessions damaged in a naturally occurring incident like a storm or fire. If your home was burglarized or vandalized, the proceeds could cover the cost of replacing stolen property as well. Depending on your policy, you could receive the items’ actual cash value or replacement cost, which is the cost of buying them new.
  3. Repairs Help Maintain Your Home’s Value. Homebuyers don’t pay top dollar for properties with fire-damaged siding, broken windows, or gaping holes in the roof. Your home insurance payout helps restore your home’s value with minimal out-of-pocket cost.

Cons of Filing a Home Insurance Claim

Filing a claim on your homeowners insurance policy isn’t always a slam dunk. The claims process has some hidden and not-so-hidden pitfalls that could leave you worse off than when you began.

  1. Your Insurance Premium May Go Up. Although this isn’t guaranteed, your homeowners insurance rates could rise after you file your claim. Exactly how much depends on the type of claim you file, the size of the claim, and your previous claims history. Generally, liability claims bump premiums more than claims related to fire, vandalism, or natural disasters.
  2. Too Many Claims Mean Your Policy May Not Be Renewed. A rate increase is unwelcome but manageable. A canceled policy is far more serious. If insurers see you as riskier than the typical homeowner, you could have trouble getting coverage on your own. Your lender might need to step in and take out a policy on your behalf — often at a much higher premium than your old policy.
  3. If You Get a Claim-Free Discount, You Could Lose It. Once you file a home insurance claim, your claims history is no longer spotless. That matters because many home insurance companies offer claim-free discounts for homeowners who never file claims.

When You SHOULD File a Home Insurance Claim

So, you’re thinking about filing a home insurance claim. How can you be sure you’re making the right call?

Use these tests to assess your would-be claim. The more that apply to you, the stronger your position.

Repair or Replacement Costs More Than Your Deductible

This is the first test your would-be claim must pass. If it doesn’t, there’s no point in filing a claim.

Your deductible is the amount you must pay out of pocket before your home insurance kicks in. Your policy documents should clearly specify this amount. It’s either expressed as a flat dollar amount or a percentage of the policy’s total coverage amount.

Dollar amount deductibles typically range from $500 to $2,500, with $1,000 being a common value. Some policies have more than one deductible, depending on the type of property damage. Separate “wind and hail” deductibles are common, for example — and often higher than the standard deductible.

If your home sustained significant damage or loss, your claim value should easily exceed your deductible. For example, if you expect repairs to cost $20,000 and your deductible is $2,000, your insurance company covers $18,000 — 90% of the total cost.

On the other hand, if you expect repairs to cost $3,000, your insurance company only covers $1,000 — 33% of the total cost. That’s a closer call because filing a claim could result in higher home insurance premiums that eventually offset your payout. 

The Event Is Covered by Your Policy

Your homeowners insurance company isn’t obligated to provide reimbursement for every type of damage or loss to your home. In fact, while your policy covers a lot, it probably excludes specific events, known as exclusions.

Common exclusions include but aren’t limited to:

  • Earthquake
  • Flood
  • Damage and liability issues caused by poor maintenance 
  • Insect infestations
  • Mold
  • Personal property losses and liability issues caused by power outages or power surges
  • Intentional damage caused by a resident
  • Damage caused by war or nuclear fallout
  • Injuries caused by aggressive dogs
  • Issues related to or caused by home-based businesses
  • Costs related to building code violations

You may need to purchase separate insurance policies to cover some of these perils. For example, your lender may require you to carry flood insurance if you live in a recognized flood zone. 

Other add-on policies are optional but often a good idea. For example, if you run a business out of your home, you should consider carrying business insurance to protect against inventory or equipment losses or damage to your workspace.

You’ve Suffered Significant Loss or Damage

Often, it’s not a close call. If your home is seriously damaged or destroyed in an event that’s covered by your policy, you absolutely should file a homeowners insurance claim. Otherwise, you’ll be on the hook for tens or hundreds of thousands of dollars in repair or replacement costs.

If you have any doubts about the extent of the damage to your home, get a few repair quotes from building contractors in your area. You can also talk to your insurance agent or ask your home insurance company to send out an insurance claims adjuster before you file.

You Haven’t Made a Claim in the Past 5 Years

Approved homeowners insurance claims typically remain on your insurance record for five years after they’re made. 

This record is known as the Comprehensive Loss Underwriting Exchange (CLUE) database. When you make a claim, your insurer checks its own records and the CLUE database to see whether you’ve made any other claims in the past five years.

If you have made a claim in the past five years, expect your insurance premiums to spike after your second claim is approved. 

For fire, theft, and general liability claims, the increase could amount to 50% or more of your previous premium. A weather-related claim won’t increase your premium quite as much, but you’ll still notice a jump.


When You Should NOT File a Home Insurance Claim

It’s not always worth it to file a home insurance claim. 

Certain situations, such as minor damage that costs less to repair than your insurance deductible, all but rule out a claim. Others, such as an active claim history, bring an elevated risk of a denied claim.

If any of these situations apply to you, think twice about filing a home insurance claim.

Repair or Replacement Costs Less Than Your Deductible

If the damage or loss is relatively minor, your deductible could be too high to bother filing a claim. There’s no point in filing a claim — and potentially increasing your policy premiums — if you won’t even receive a payout.

Even if it’s a close call, be mindful of the potential for your premiums to go up after a successful claim. A claim worth $20,000 probably makes sense, but a claim worth $3,000 or $4,000 might actually set you back.

Damage Was Caused by Lack of Maintenance or Normal Wear & Tear

An event that appears to be covered by your policy might not be if the insurance adjuster can argue that it was caused by neglect, poor maintenance, or even normal wear and tear.

For example, let’s say your home loses heat during the winter, causing a water pipe to burst in your ceiling. Homeowners insurance policies generally cover this type of event — if the burst pipe was in good condition to begin with. If the pipe was already heavily corroded, your insurer might blame you for not replacing it sooner. They could deny the claim altogether.

The Event Isn’t Covered by Your Policy

It’s often quite easy to figure out whether a particular event is eligible for home insurance coverage. If your home collapses in an earthquake and your policy specifically rules out claims for earthquake damage, you’re out of luck. Hopefully, you have earthquake insurance.

But closer calls are more common than you’d think. If your resident termite colony worsens an existing foundation issue that eventually spurs a costly repair, your insurer could argue that the entire claim falls under the insect damage exclusion. 

When in doubt, it’s worthwhile to begin the claims process anyway. If you don’t like what the insurance adjuster has to say, you can drop the claim without increasing your insurance rates. 

Or you can hire a public adjuster — an independent insurance adjuster who can make a stronger case to your insurance company. Public adjusters usually work on contingency, so they only get paid if your claim is successful.

You’ve Made Multiple Claims in the Past 5 Years

The more homeowners insurance claims you make in a five-year period, the more your insurance rates increase after a successful new claim. 

Make too many claims in too short a period, and your insurance company could drop you altogether. If you’re unable to find replacement coverage, your lender could take out a policy on your behalf. Expect this lender policy to cost a lot more than your old policy.

All that said, you shouldn’t automatically rule out a new homeowners insurance claim just because you recently got an insurance payout or two. If your home is seriously damaged or destroyed by a covered event, it’s probably still worth it to file. Just be ready to pay higher premiums on the back end.


Final Word

Some say the best way to save money on homeowners insurance is not to file a claim at all. There’s a grain of truth to that, but don’t take it too literally. 

If your home is seriously damaged in an event that’s covered by your policy, a home insurance claim is absolutely warranted. Taking the time to file could save you tens or hundreds of thousands of dollars in out-of-pocket expenses, keeping you on track to reach your long-term financial goals.

Still, it’s always a good idea to take stock of the situation before filing a claim. If your home sustains damage due to an event not covered by your policy or the cost of repairs doesn’t exceed your policy’s deductible, a claim isn’t in the cards. And even if filing a claim would be profitable on paper, it’s worth considering the long-term costs — in the form of higher premiums for years to come.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com

Should You File an Auto Insurance Claim After a Car Accident?

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Nothing says “rude awakening” like trudging out to your car in the morning to find the passenger window smashed and the interior ransacked. 

You don’t keep anything valuable in your vehicle, but the damage to your window is real. And the burglar put some serious dents in the door. You’re easily looking at a $1,000 repair bill.

Should you eat the cost yourself or file a car insurance claim? That depends on what your auto insurance policy covers, the size of your deductible, and how the claim might affect your car insurance rates moving forward. 

Should You File an Auto Insurance Claim?

Filing an auto insurance claim is not as easy as pushing a button. Before you begin the process, know what you’re getting yourself into.


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Pros & Cons of Filing an Auto Insurance Claim

Auto insurance claims have upsides and downsides. On the plus side, a claim helps you reduce or eliminate out-of-pocket repair costs and costly liability lawsuits. On the other hand, filing a claim can raise your premiums and might be more trouble than it’s worth.

Pros of Filing a Car Insurance Claim

Filing a car insurance claim can have clear financial benefits — if your insurance company approves the claim. 

  1. It Helps You Pay for Repairs. A successful car insurance claim reduces or eliminates your out-of-pocket car repair costs. Considering that car repair bills can cost several thousand dollars after a serious accident, that’s no small thing.
  2. It Protects You From Lawsuits. If you’re involved in a car accident that injures another person, they may be entitled to sue you for medical bills and other damages. If successful, this suit could cost you far more than repairing or even replacing your own vehicle. Your auto insurance policy can pick up some or all of these expenses, but only if you file a claim.
  3. It Could Get You Into a Newer Car. If it’s going to cost more to repair your vehicle than replace it, it’s considered a total loss. Depending on the terms of your policy, you may be entitled to a payout worth more than the car’s fair market value. You can use this reimbursement to buy a nicer, newer car than the one you lost.

Cons of Filing a Car Insurance Claim

Many car insurance claims are worth filing, but do understand the drawbacks before moving forward. Otherwise, you might be surprised by nagging out-of-pocket expenses or higher insurance premiums.

  1. It Might Raise Your Rates. It’s likely, though not guaranteed, your car insurance policy premium will increase after you file a claim. Whether and how much depends on your insurer’s surcharge schedule, which determines how rates change in response to different types of claims. If you have a blemish-free driving record, your auto insurance company might ignore your first claim and hold off on the rate increase. 
  2. You Might Still Have Out-of-Pocket Costs. In most cases, auto insurance claims reduce but don’t eliminate out-of-pocket costs. That’s because most auto insurance policies have deductibles — the portion of the claim the policyholder pays themselves before insurance coverage kicks in. The higher your deductible, the more you’ll pay out of pocket.
  3. The Claims Process Takes Time. Filing a car insurance claim is easier than it used to be. You can fill out claim forms, upload photos of the damage, and send copies of medical bills to your carrier online or through a mobile app. You might not even have to meet with an insurance adjuster in person. But the process still takes time, especially if the insurer needs more information or denies your claim at first. You have to decide whether a relatively small payout is worth the effort.

When You Should File a Car Insurance Claim

In some situations, filing a car insurance claim really is the best course of action. A claim is more likely to make sense when the stakes are higher, such as in these situations. 

1. You Had a Car Accident With Another Driver

In most cases, an accident involving another driver is grounds to file a car insurance claim. That’s true even if the accident doesn’t appear serious at first.

The other driver might notice body damage only after returning home. Or they might decide to seek medical care hours or days later when their nagging neck cramp worsens — ditto for you or your passengers.

When you’re involved in an accident with another driver, the best practice is to call the police and remain at the scene of the accident. Then, do the following:

  • Get the other drivers’ contact information, including their phone number.
  • If they have it handy, get the other drivers’ insurance information.
  • If you have one, contact your insurance agent to let them know that you’re likely to file a claim.
  • Answer the responding officer’s questions so they can produce an accident report
  • If police don’t respond in person — which is common for minor accidents in some jurisdictions — visit the nearest police station to file a police report as soon as you’re able.
  • Keep records of any medical expenses and repair bills as you receive them.

File your claim as soon as you have your repair estimates and medical bills in hand. Most states allow at least two years to file a bodily injury claim and even longer to file a personal property damage claim. But car insurance companies tend to be suspicious of claims filed months or even weeks after an event. The sooner you file, the less likely the company is to deny your claim — and the sooner you’ll get your claim payment.

2. You Were Injured in an Accident Involving Another Driver (or the Other Driver Was Injured)

Even if you think your injuries are minor, filing a car insurance claim ensures you’re protected by your policy’s bodily injury coverage. 

That’s particularly important if you don’t have health insurance or have a high-deductible health plan that could leave you on the hook for thousands of dollars in out-of-pocket medical expenses. 

Filing an insurance claim after an accident involving another driver reduces the risk you’ll be surprised by a lawsuit down the line. In some states, drivers can sue to recoup medical expenses and other costs associated with an injury and recovery, but your insurance coverage will reduce the financial burden. 

3. You Damaged Your Car Yourself & the Repairs Cost More Than Your Deductible

The “nice” thing about a single-car accident is that you don’t have to worry about other drivers’ medical claims. But single-car accidents can still be really costly, even if you walk away from them no worse for the wear.

If your estimated repair costs significantly exceed your policy’s deductible, a car insurance claim could be warranted, even if it results in a higher premium. 

But ask your insurer how much your premium is likely to increase after you file and for how long. Five years is typical, but some insurers could cut you a break sooner.


When You Should NOT File a Car Insurance Claim

While filing an insurance claim can be financially useful in cases of major damage or injury, there are times when you’re best off not filing a car insurance claim.

1. You Damaged Your Car Yourself & the Repairs Cost Less Than Your Deductible

Hold off on contacting your car insurance company after a minor accident that doesn’t involve another driver. First, determine the extent of the damage and the likely cost to repair it. 

If the repair shop quote comes in lower than your collision or comprehensive deductible, you’re better off not filing. You can choose to cover the expense out of pocket or leave it be. At best, your claim would be a financial wash, and it could cost you more in the long run if your premium increases. 

2. The Type of Damage Isn’t Covered by Your Policy

Not all types of vehicle damage are created equal, at least not in the eyes of your insurance company. 

One of the easiest ways to reduce your car insurance premiums is to drop comprehensive and collision coverage, which aren’t required by state law. If you have an older car that isn’t worth much, there’s a good chance you’ve already done so. 

That’s probably a smart move. Just know that you can’t turn around and file a claim for damage those add-ons would have covered. That includes:

  • Comprehensive Coverage. This insurance covers damage caused by animals and objects, including road crashes involving animals and objects falling on or striking the vehicle. It also covers weather-related damage, such as hail damage, as well as theft, vandalism, and sometimes fire damage.
  • Collision Coverage. Collision insurance covers crashes involving another vehicle or a stationary object, such as a tree, building, or retaining wall. It also covers single-vehicle rollovers and fall-overs.

Note that if you’re still paying off your car loan, you may be required by the lender to carry these types of insurance.

3. Your Car Isn’t Damaged & the Other Driver Doesn’t Want to Pursue a Claim

If you’re fortunate enough to escape a minor fender bender with no visible damage to your car and no bodily injury to yourself or your passengers, you don’t need to file a claim for your own purposes.

If the other driver or drivers involved in the accident were similarly fortunate, they might not want to file a claim either. Even if they sustained minor vehicle damage, they might not want to take things further because they don’t have valid car insurance. About 1 in 8 U.S. drivers were uninsured in 2019, according to the Insurance Information Institute.

In this case, you can simply walk — or drive — away.


Final Word

Millions of car accidents happen on American roads each year. Each one represents a potential unexpected expense for the person or persons involved.

Not all cause significant financial distress, however. Very often, car insurance makes the difference. Adequate car insurance coverage can turn a $5,000 repair bill into a far more manageable $500 expense, entirely offset the cost of replacing your totaled vehicle, or even shield you from a lawsuit that might otherwise bankrupt you.

On the other hand, minor fender benders might not warrant the effort it takes to file an auto insurance claim. Filing could even backfire if it produces little upfront financial benefit and years of higher premiums on the back end. 

So it pays to know when to file — and when to hold your fire.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Source: moneycrashers.com