You're right, no one will insure you after the fact, but you do need to purchase health insurance now so other things will be covered, such as the newborn child. As a self-employed individual, you may claim a special deduction for health insurance on your form 1040. For 1998 and 1999 you may deduct 45 percent of amounts you paid during the taxable year for insurance that provides medical care. The amount will gradually increase to 100 percent in 2007. So there will be some help for you with that bill.

As for paying for the birth of the baby, speak with your doctor and see if she/he will extend you credit and see if you can set up a payment plan. If you own your own home check out a home equity loan and use your credit card as last resource for the interest rate there will be the highest. You will need to do the same thing with the hospital and see what kind of payments terms they will allow you to set up.

The tax law only provides a limited opportunity to deduct medical costs for you and your family. You may only deduct expenses exceeding 7.5 percent of your adjusted gross income. So if your AGI is $40,000 for 1998, any medical expenses exceeding $3,000 will be deductible. But your deduction for the health insurance is a special deduction for the self-employed so you will qualify for that. Also, your medical costs become deductions in the year you pay them.

I also suggest that you consider purchasing JK Lasser's Taxes Made Easy for Your Home-based Business, which offers help on taxes and deductions.

Answered by Dee Lee, CFP, MBA Certified Financial Planner & Author Harvard Financial Educators

Content on this site is not a substitute for professional medical or healthcare advice, diagnosis or treatment, and may not be used for such purposes. Always seek the advice of your physician or other qualified health provider with any questions you may have regarding a medical question or condition. Reliance on information presented on this site is at your own risk. This site contains the opinions and views of other users. Given the interactive nature of this site, we cannot endorse, guarantee, or be responsible for the accuracy, efficacy, or veracity of any content generated by our users.