Although finding health insurance may present a huge challenge to self employed workers, it is still possible to evade this sticky situation and get decent coverage plans at prices that you can manage. Nonetheless, it is not guaranteed that your coverage plan will be affordable. This will be determined by various factors, such as: your place of residence, the kind of policy you choose and the age and health status of those being insured.
A third of America’s population (approximately 42 million people) is reported to be self employed. According to the Gallup and Healthways, the majority of this population is believed to lack any form of health insurance, and these numbers have been steady on the rise since 2008, reaching 17.1% in 2011.
A major hurdle for those seeking these types of insurance cover is the relatively high monthly premiums. For one to get cover, they will have to pay about $600 or each month – this being four times more than what those who are in employment pay, as pointed out by Metropolitan Financial Group’s expert financial planner, Greg Bitz.
Luckily, the Affordable Care Act, under the 2010 health care law reforms, will seek to address this issue at the start of the year 2014. This Act will allow the population under 65 to buy health insurance via state insurance changes – with the low and moderate income earners enjoying tax credits.
On another positive note, self-employed workers paying insurance premiums can now subtract 100% of their income costs when compiling their taxes for federal income. Unlike other medical expenses, this deduction is not affected by the 7.5% AGI restriction.
If you are self employed, below are eight ways of landing health insurance:
Your Former Employer’s Plan
Paying health insurance up to age 65 is problematic for most people. After this age, Medicare kicks in but still does not cover all your costs of health care. Most workers do not have a retiree plan from their employers, thus consider yourself lucky if you have one. Amongst large firms, only one in four offered health benefits for retirees in the year 2011. This is way below compared to the 32% in 2007 and 66% in 1988, as per the survey done by the Kaiser Family Foundation, Health Research and Educational Trust. Not more than 6% of small firms offered retired workers health benefits in 2011.
After retiring, some companies may also let you purchase health insurance through the company plan or subsidize a fraction of the premiums. This makes payment cheaper. However, the company reserves the right of terminating the plan at any time.
Your Spouse’s Plan
Again, count yourself lucky if your partner’s offers full family coverage. According to statistics by the Kaiser Foundation, the yearly premiums meant to sponsor family coverage grew to $15,073 (around $5400 for a single coverage) in the previous year, this being 9% more than that paid in 2010. Averagely, employers pay $10,944, while workers pay $4,129 as yearly premiums.
COBRA – Consolidated Omnibus Budget Reconciliation Act
The federal requires all employers to offer COBRA dental and carry over health coverage for yourself and those dependent on you, for a period of 1 ½ years after retiring. Though this arrangement is expensive, you will not have to worry about cover for preexisting conditions. In general, you will pay for the total insurance cost plus an additional 2% administration fee.
Buy your Own Policy
When buying, search for those policies which have minimal premiums and higher deductibles. Use healthcare.gov and analyze the various insurance options available in your area. Note that individual policies are usually costly, especially if you are 55 or more. To maintain your premiums within budget, prepare to pay for deductibles of $1,000, $2,500 or $5,000.
Additionally, here are the factors to consider while purchasing your own health insurance policy: deductibles, co-pays, co-insurance, premiums and the end of year limit you have to off-set before your policy provider settles the remainder.
Pre-existing condition plans
If you are suffering from any health complications, there are high risk pool programs in most American States that can help you out. If you have not had any insurance cover for half a year, and have a pre-existing condition, you may qualify for insurance through PCIP. The law dictates that every state ought to have PCIP.
Come up with a small business group plan
If you have any employees, you may as well qualify for an insurance plan for small groups. This could also be of great benefit for those having pre-existing conditions. In some States, the law requires all health insurers to provide guaranteed issue health plans, regardless of whether some members have health complications. Consult an insurance broker to help you set this up.
Stay employed
Lastly, consider getting a part time job. This way, you will get enough income for payment of your health benefits. If you manage to work 20 hours a week, some employers will offer you group health benefits. However, of all the firms that provide general health benefits, only 16% offer provide the same for part time employees.
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