Decoding Your Maternity Leave Policy - Baby Chick
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Decoding Your Maternity Leave Policy

Whether you're expecting or will be soon, find out what to know about maternity leave and the FMLA.

Updated April 19, 2024

by Meredith Rines

Accountant and Certified Financial Planner

If you’re getting ready for your new baby’s arrival, you might have many questions surrounding your maternity leave. Let’s go through all the details you need to know and what questions to ask your human resource department before heading out the door.

What is FMLA?

FMLA is an acronym for the Family and Medical Leave Act. The FMLA is a federal law that guarantees employees up to 12 weeks of unpaid leave each year without the threat of job loss. It also requires employers to continue health insurance coverage for workers on leave.1

It’s important to know not every employer must comply with FMLA rules. However, public employers, such as state and federal agencies and schools, must comply. All other employers must meet specific requirements to be covered, such as having 50 or more employees for at least 20 workweeks during the current year or the prior year.

Do You Qualify for FMLA?

Even if your employer falls under coverage for FMLA, an employee may not qualify. To qualify as a covered employee under FMLA, you must work at least 12 months for your covered employer and have worked 1,250 hours during those 12 months. If you don’t meet those two qualifications, then FMLA will not protect you.2

What is Short-term Disability?

You should also know FMLA does not guarantee paid leave from your employer. It only guarantees you’re safe from being replaced while on leave.

What happens if your employer offers unpaid maternity leave? Don’t panic; you have options. If you plan on becoming pregnant, consider a short-term disability insurance policy. These types of policies cover maternity leave for some time, plus they can benefit any type of working mom — employee, contractor, freelancer, or a self-employed worker.

The biggest consideration is that you must have the policy in place before getting pregnant, which means paying premiums before getting pregnant and while pregnant. Also, there might be a waiting period between the qualifying event (the birth or adoption of your child) and when payments start. These policies can cover anywhere from 50% to 100% of your salary for about six weeks. Some may pay longer for having a C-section or other complications.

To learn more about short-term disability policies, contact your human resources representative. Some employers have partnerships with insurance companies that offer short-term disability policies, but not all. So, do not be discouraged if your employer does not have a company to recommend. You can research policies online or contact a local insurance agent to find out more.

Paid or Unpaid?

What happens if your employer offers paid maternity leave? That’s great news! Hopefully, the pay is 100% of your salary, but you may want to verify that with your manager. You might also need to verify the length of paid maternity leave. Just because FMLA offers 12 weeks of protection doesn’t mean your employer will pay you for 12 weeks.

Will you have to pay taxes on your maternity leave benefits? Yes, maternity leave from your employer is a paycheck, so that it will be reflected in your W2 at the end of the tax year. However, if you have been paying the premiums on your short-term disability policy with after-tax dollars, those benefits could be tax-free. To be sure, it’s best to talk to a certified public accountant before filing your taxes.

How Much Time Off?

The time before returning to work can also vary from employer to employer. Some may offer a 12-week plan, while others offer longer leave. Also, if you want to return to work full-time, you might have the opportunity to return on a part-time basis before the end of your maternity leave.

When To Take Leave?

Starting your maternity leave is a personal decision. Some women may wait until their child’s birth; others might start sooner. If you’re having complications or want more time to prepare, you can talk to your employer about starting your maternity leave before your child arrives.

Your employer’s maternity leave can vary from workplace to workplace. Your best option is to schedule a meeting with your human resource officer or office manager. If you’re unhappy with your employer’s maternity leave or want more coverage, don’t hesitate to ask.

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Meredith Rines, MBA, CFP®
Meredith Rines Accountant and Certified Financial Planner
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Wife, Mom, MBA, Certified Financial Planner, and a budget and financial strategist helping families pay off debt and live the life they've always wanted. Meredith resides in Missouri with her… Read more

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