Maternity and Paternity Leave: A Guide for Expectant Parents

Health, Managing Health Insurance
Maternity and Paternity Leave: A Guide for Expectant Parents

Going back to work after adding a new family member can be gut-wrenching. You want to spend as much time with your little one as possible, but you can’t go without a regular paycheck for too long. For most new parents, a combination of leave types is the right solution. Here, the Nerds look at:

  • What parental leave is mandated by law.
  • What may be offered by your employer.
  • How to prioritize your options for the best family and budget outcome.

Spending time with your new baby is priceless, not to mention good for his or her health. But spending time away from work can be costly if you don’t take full advantage of your parental leave options. Mothers and fathers have been been navigating maternity and paternity leave policies for decades, despite the U.S. having one of the least impressive frameworks for such leave in place. With knowledge and planning, you can make them work for you too.

Understand your options

Employers are legally mandated to offer very little in the way of maternity and paternity leave. The requirements they do have fall under the Family Medical Leave Act. Above and beyond this narrow scope of mandatory unpaid leave, you’ll likely have to use a combination of paid parental leave benefits, if your employer offers them, vacation time, sick leave and, depending on availability, short-term disability.

Your first step: Set up a time to go over your leave options with your company’s human resources representatives. More than likely, they’ll suggest using some of the following options, and once you know how much time you’re allotted for each, you can get a clearer picture of how many weeks you can spend at home and how the leave will affect your household finances.

Pro tip: Talk with co-workers who have taken leave before. Although human resources can give you the technical aspect of parental leave, a parent who’s actually put the company’s policies into practice may have some unique insights.

Paid parental leave benefits

Getting paid to spend those precious first months with your new arrival would be ideal, but only 39% of full-time American workers have access to paid family leave, according to the White House. Three states — California, New Jersey and Rhode Island — have taken the initiative to mandate paid family leave, but residents in the remaining ones generally have to rely on the kindness of their employer for any paid maternity and paternity leave.

Sick leave and vacation time

Expectant parents often bank their sick leave and vacation time in preparation for the new baby. Employer policies regarding this use of paid leave vary. New mothers should be able to use sick time for the final weeks of their pregnancy and the days after giving birth, since they may be physically incapable of working. Some companies are flexible with the use of sick leave, allowing it throughout the first months of your baby’s life and after adoption. Vacation time, understandably, is easier to access.

Keep in mind that babies get sick. You may not want to exhaust your sick leave allowance during maternity leave, saving some of it for inevitable doctor visits and future illnesses.

Short-term disability

Short-term disability insurance can come from your employer or your state, and typically covers only a percentage of your total income. Only a handful of states offer state disability insurance (SDI) or temporary disability insurance (TDI), but an estimated 40% of employees have access to this option through work.

Use of disability insurance is largely limited to the date of delivery through the six weeks after, when mom is considered “disabled” due to a medical condition. High-risk pregnancies and complications after delivery could increase the time you’re eligible for these benefits.

This guide from the National Partnership for Women and Families is a useful resource on state-by-state parental leave laws.

Mandated unpaid leave

The Family Medical Leave Act requires some employers to provide up to 12 weeks of unpaid leave for employees with serious health conditions or those welcoming a new child through birth or adoption. This leave is considered “protected,” which means workers don’t have to worry about losing their job because of time away. (Technically, they’re not guaranteed restoration to the exact position they held before but to one with “equivalent” pay, benefits, shift and location.) But not everyone is entitled to FMLA leave.

Workers are eligible for coverage and protection under the FMLA only if they meet all these requirements:

  • Have worked for the company for at least one year and have put in 1,250 hours during that 12-month period.
  • Work for a company with 50 or more employees.
  • Live within a 75-mile radius of their workplace.

The greatest downside to using FMLA leave: It’s unpaid. When compared with 181 countries around the world that guarantee paid maternity leave, according to the National Partnership for Women and Families, U.S. policies may be considered fairly disgraceful and have been a topic of contention for years. So, although the FMLA provides for a very limited group of people to spend time with a new baby, you’ll likely also spend that time sweating the lack of income, if this is your only option.

If your employment doesn’t meet the FMLA requirements, your employer may still opt to offer unpaid leave. Ask before assuming the worst.

Paternity leave

If you’re a new father, you’re likely to face even greater difficulty in getting time off to nurture your new family member. A 2014 study from the Families and Work Institute found that only 14% of American employers offer paid paternity leave options. As with maternity leave, the U.S. falls behind many other countries — 81 nations guarantee paid leave for new dads, according to the National Partnership for Women and Families.

However, like new moms, fathers can often use vacation time if their employer doesn’t offer a better paid option. Likewise, the period immediately after the child’s birth may be appropriate for sick leave use or even short-term disability, as you’re caring for a spouse or partner’s medical recovery. In many cases, employers allow sick leave for new adoptions as well.

Same-sex parents

As it stands, same-sex couples face the most difficulty in getting time off to welcome a new baby, particularly when it comes to nonbiological parents. But things are improving. A 2010 decision by the Department of Labor extended coverage under the FMLA to those who stand in loco parentis, or in place of the parent, allowing nonbiological parents access to FMLA leave. Likewise, a Supreme Court ruling found the FMLA to apply to same-sex couples who are legally married under their state’s laws. But remember, the FMLA mandates only unpaid leave.

Paid leave from your employer may be more difficult to come by if you aren’t the parent giving birth. Although discrimination is a possibility, if you’re not legally married to your partner or if you’re not named on the birth certificate or adoption paperwork, your employer may have legal footing to deny you leave. If you have concerns about your legal rights, contact an attorney or reach out to LGBT legal advocacy group Lambda Legal for help.

Making it all work

Deciding how much time you can afford to take off will depend on the benefits offered by your employer and protections allowed under state laws where you live. Plan early just in case you are put on bed rest or want to start your leave within the last month of pregnancy.

  • Determine how much of each type of leave time you’ll have at your disposal by the last month of your pregnancy.
  • Estimate how much time you want to spend at home before returning to work.
  • Prioritize using your employer-offered paid leave first, followed by short term disability (depending on your state), vacation time, sick leave (if allowed), and FMLA or unpaid leave.
  • Alert your employer of your leave intentions as early as possible, so you can both begin planning your exit far in advance.

A note on budgeting

Budgeting for this time should be a high priority. Along with the crib and layette, don’t forget to set aside money so you’ll be able to enjoy those first few months with your new child without stressing about work and finances.

Your monthly household expenses will rise with the new family member, so remember to account for things such as diapers, food and formula, and potentially higher health insurance premiums. Also, include any anticipated out-of-pocket expenses you’ll have with labor and delivery itself.

When it comes to unpaid leave, a two-income household may be able to go without one paycheck for months, whereas being uncompensated could force a single mother, for example, back to work long before she’d like. The same can be said for the blow your income takes when relying on short-term disability, which may pay only 60% of your salary. Saving for this period ahead of time can make any necessary unpaid leave a little easier to handle.

Plan now to enjoy later

The time after your child’s arrival should be spent in peace — well, aside from the sleepless nights — and not in worry over money. Preparing for that span will take some effort, but the time and potential financial sacrifices you make now will pay off in full — and set you up for the many selfless acts that good parenting requires throughout the years.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: elizabeth@nerdwallet.com. Twitter: @ElizabethRenter.