Dadvesting

Why our 1st baby cost almost 2x our 2nd

My wife asked me last week if I'd looked at open enrollment yet. I hadn't. Then I remembered what skipping it cost us the first time around: our first kid's birth cost us almost double what our second one did. Same family. Different health plan.

In this issue
01How the plan you click in November sets what your baby costs
02The line under the deductible that doubled our first bill
032 pre-tax accounts sitting lower on the same page

Your baby's bill gets decided the fall before

Mason here. Our first kid's birth cost us about 2x what our second one did. Same family, same kind of bills.

The biggest difference wasn't the hospital or the delivery. It was the plan we'd clicked the November before.

The first time, we looked at the premium and the deductible and stopped there. What we skipped was the line right under it: the % the plan covers after you hit your deductible.

That one line was the main reason kid #1 cost us double. Our deductible was gone early, and then we kept paying a big share of every bill that came after it. The second time, my wife and I checked that number before we clicked anything. Half the bill.

For reference, KFF found the average birth with employer coverage runs $18,865 in total health costs, with $2,854 of that paid out of pocket by the family. That's the average from 2018 to 2020 claims. Hospitals have not gotten cheaper since.

Quick translation, because the portal won't give you one. Once you hit your deductible, most plans don't pay 100%. They pay a % (often 80%, sometimes 60% or 70%) and you pay the rest. That rest is called coinsurance, and it keeps running until you hit your out-of-pocket max.

A delivery blows through most deductibles in a single hospital stay. So in a baby year, that % ends up deciding more of your bill than the deductible does.

Plan covers 80%
You pay $3,000
on $15,000 of bills after the deductible
Plan covers 60%
You pay $6,000
same $15,000, same deductible. 2x the bill, until the out-of-pocket max caps it

Here's the part nobody told us. A baby year isn't a normal year.

In a quiet year, the low-premium plan usually wins because you barely touch it. In a year with a delivery, you're almost guaranteed to blow through the deductible and get close to the out-of-pocket max. That flips the math.

Here's what that looks like with 2 made-up but realistic family plans. Plan A costs $150 a month with an $8,000 out-of-pocket max. Plan B costs $350 a month with a $4,000 max.

Quiet year
A wins by $1,800
A: $2,800 total. B: $4,600 total. About $1,000 of care, premiums included
Baby year
B wins by $1,600
A: $9,800 total. B: $8,200 total. Both plans hit the out-of-pocket max

Same 2 plans, opposite winners. The only thing that changed was whether a baby showed up.

And here's the catch that got us: in most employer plans, finding out you're pregnant is not a qualifying life event. You can't switch plans mid-year because of the test. The birth is a qualifying event, but by then the delivery bill is already on whatever plan you picked in November.

While you're in the portal, 2 more lines are worth 5 minutes. The Dependent Care FSA covers daycare and went to $7,500 a household in 2026, the first increase since 1986. On a 22% bracket that's about $2,224 a year you don't pay in taxes.

If you pick a high-deductible plan, the HSA limit for 2027 is $9,000 for families. That one rolls over forever and can be invested, which narrows the gap on Plan A if it qualifies.

What the math says

In a year with a birth, the deductible is the smallest part of the story. Most families clear it fast, so the % the plan covers after that and the out-of-pocket max end up driving the bill. A plan covering 60% after the deductible costs 2x what an 80% plan does on the same bills, up to the max. In a quiet year the same math usually favors the low-premium plan. The variables that move your number: whether a baby (or surgery) is likely next year, each plan's coverage % after the deductible, the gap between their premiums vs. the gap between their out-of-pocket maxes, and whether an HSA comes with the cheaper plan. Plug your 2 plans into that comparison and the answer shows up. Which plan fits your family is your call.
 

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The Short List
Check the line under the deductible: in your plan summary it's usually called coinsurance, written as something like "20% after deductible." That number tells you what share of every bill after the deductible is yours. It's the one that doubled our first birth.
Having a baby next year? The birth is a qualifying life event, and federal rules give you at least 30 days to add the baby to your plan. Some employers allow 60. The pregnancy itself usually doesn't let you switch plans.
The Dependent Care FSA: $7,500 per household for 2026, up from $5,000. Mostly use it or lose it, and the same dollars can't also go toward the Child and Dependent Care Credit.
The 2027 HSA numbers: $4,500 for self-only coverage, $9,000 for family. To qualify, the plan's deductible has to be at least $1,750 self-only or $3,500 family. Full 2027 limits here.
Small thing that made us laugh: our first open enrollment strategy was find the word "deductible," feel smart for knowing what it meant, click submit. The line right under it cost us double on kid #1. We do not recommend the strategy.
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What did your kid's birth cost you out of pocket, and what kind of plan were you on? Hit reply. If enough of you send numbers, we'll share the range (no names) in a future issue. We read every one.

Open the portal this week, even if it's only to look. 30 minutes in October beats a surprise bill next summer.

Until next week,
Mason & Bryce

One thing before you go: we're 2 dads who read the same statements you do, not licensed advisors or fiduciaries. Everything here is what we're doing and learning, not personal advice for your situation. Different family, different plan. Talk to a fee-only fiduciary before you move real money if you have questions.

Data: Birth costs ($18,865 total, $2,854 out of pocket, employer plans, 2018 to 2020 claims) per Peterson-KFF Health System Tracker. Plan A/B figures and the 80%/60% coinsurance example are illustrative, not real plans. Dependent Care FSA $7,500 (2026) per IRS, via National Law Review. 2027 HSA limits ($4,500/$9,000) per IRS Rev. Proc., May 2026, via PAI. Plan terms defined by HealthCare.gov. Tax savings assume a 22% federal bracket plus 7.65% FICA, before state tax. Figures as of October 2026.

Legal disclaimer: Dadvesting is a media and publishing company. It is not a registered investment adviser, broker-dealer, or financial planner, and nothing in this publication constitutes investment, tax, or legal advice or a recommendation to buy or sell any security. Content is for general informational and educational purposes only and reflects the personal views and experiences of the authors. No advisor-client, fiduciary, or other professional relationship is created by reading, subscribing to, or interacting with this publication. Before making any financial decision, consult a licensed, fee-only fiduciary financial advisor, tax professional, or attorney qualified to advise on your specific circumstances.
 

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