Health Insurance for the Self-Employed: What You Should Know
Previous generations had access to healthcare insurance through their employers, who were often big corporations or government employers. A pension often came with the job, as well, giving a worker incentive to stay in the same job for decades. The job offered a security that couldn’t be found by opening a small store or diner.
But in today’s entrepreneurial environment, benefits have become a challenge. If you’re either self-employed or you own your own business, you have to sacrifice benefits like medical coverage. Unfortunately, proprietors can get sick, too. Individual health insurance can be pricey, making it difficult for business owners who are putting every dime into growing their companies. Here are some options for freelancers and business owners.
Health Insurance Marketplace
The government’s Health Insurance Marketplace is the first place self-employed professionals should start. Here is where you’re most likely to find good coverage at an affordable price. The biggest problem, though, is that you’ll have to qualify to be eligible. Freelancers and self-employed workers can apply for coverage, but savings is based on your estimated income. If you’re pulling in too much money with your business, you may not get the affordability you would get from other sources.
As you go through the application process, the system will alert you to any tax credits you qualify to get, based on your family size and income. You’ll also learn whether or not you qualify for either free or inexpensive coverage through programs in your state such as Medicaid. By giving you this information, the Health Insurance Marketplace saves you from a separate inquiry process and helps you find the best rate possible.
Trade Organizations and Groups
The biggest problem for sole proprietors is that you don’t qualify for the group discounts a large business gets. One way to get that group benefit is through joining with others in your industry to sign up for medical coverage. Chances are, you already belong to a trade organization specific to what you do for a living. Check first to see if health insurance is provided to members as a benefit of membership. Don’t stop with that option. Compare it to what you’re being offered elsewhere to make sure it’s the best deal.
If you can’t find coverage through one of your trade organizations, consider other memberships you hold. If you’re over 50, AARP has group health plans, or you may find a good option through your alumni association or your church. New Yorkers can take advantage of health plans offered through The Freelancers Union, which promises rates below market standard.
Don’t be afraid to contact health insurers directly for coverage. In fact, even if you’re offered a plan with one of the above options, you should price it against what you can get on your own. Try major insurance companies such as Aetna, Cigna, and Blue Cross and compare their offerings against each other. Most insurers have rate calculators on their websites to make it easy to calculate rates.
If the rates seem too high, consider a higher deductible, especially if you have few health problems. You may be able to set money aside each month and earn interest on it, then pay the deductible when it comes due. Many plans cover preventive care for low deductibles or no deductibles at all, giving you the annual checkups you need. You’ll then only have to pay a large deductible if you need emergency care, a specialist visit, or surgery.
If you’re married, your spouse’s job may provide health insurance for the entire family. This will, of course, be the best option you’ll find. Some part-time jobs provide reasonable insurance for families, so your spouse may be able to take a job to cover the insurance for the family, making the low pay worth it.
For those who exit a job with benefits to take on freelance work, COBRA is an option. While it isn’t expensive, it extends your existing coverage for a period of time, allowing you to make other arrangements. If you choose COBRA as your option, be sure you price it against other types of coverage, especially the Health Insurance Marketplace.
As important as health insurance is, it isn’t an option for most business owners and freelancers. By knowing your options and pricing each of them, you’ll be able to find an affordable plan for you and your family, allowing you to focus on bringing in the money to pay the monthly premiums each month.