Whether you are just starting out as a self employed individual or have owned your own business for years, it’s a good idea to consider your health insurance options. Health insurance policies are always subject to change, and regular reviews can be helpful. What options are available to you?
Why You Need Health Insurance When Self Employed
Health insurance – although often expensive and complicated – is a must. You are not immune to accidents. You are not immune to sickness. You are not immune to major illnesses.
Even if you’re working from home, bad things can happen to you. Don’t risk your health (and your financial wellbeing) because you don’t want to drop a couple of Franklins every month. It’s not worth what you think you could save.
Health Insurance for the Self Employed: Your Options
The Consolidated Omnibus Budget Reconciliation Act of 1985
Better known as COBRA, this act will allow you to extend your employer-sponsored health benefits for up to 18 months after you leave a job. Employees, spouses, and dependents can all be covered under COBRA.
This is a nice option because it allows you to keep the health insurance you are familiar with, although you will have to pay substantially more for your premium – think over twice what you may pay now. Why? Your former employer no longer will pay their portion of the plan’s premium which can be around 75 to 80 percent of the cost.
As you can see, this is only a temporary solution for those becoming self employed. For more information on the benefits and limitations of COBRA, visit the United States Department of Labor.
Individually Underwritten Policies
If your family’s medical history is straightforward and clean, you might be able to find a policy that offers benefits that work for you. It’s important that you review all aspects of your health insurance, as you want to make sure you are covered in the event of a medical emergency.
Review essential health insurance definitions before you make the leap into any one plan. There are important terms you should know as you’re shopping for individually underwritten policies. Educate yourself, and you’ll end up with a customized, solid policy.
Health Savings Accounts (HSAs)This is a great option for healthy families – even those not self employed! As of 2012, a family can save up to $6,250 tax free in an HSA that they can use toward their health insurance deductible. That’s right, tax free! Individuals can save up to $3,100 – again, tax free!
Another beautiful thing about HSAs is that unlike flexible spending accounts, you can roll over unused money year to year if not spent. Healthy families can truly save a lot of money over the years by starting an HSA.
Of course, if your spouse works a job with top-notch benefits (let’s say in the medical industry), you might consider being covered under their plan. Keep in mind that it may cost more for your portion of coverage than your spouse’s portion, but depending on the benefits you might be able to justify the extra cost.
Trade Association or Union Plans
Do a quick search on Google, Bing, or your engine of choice for trade associations or unions offering plans. For example, if you’re a freelance writer, you might be able to find a trade association that will cover you. Hmmm, interesting!
Work Part-time for an Employer Offering Health Insurance
As a last resort, you could always work part-time for an employer that will graciously offer you some health insurance. Self employed individuals might not like the sound of this, but the option is always on the table if your finances require it.
A couple of ideas: Starbucks or UPS. They are notorious for great health benefits.
These health insurance options should be considered and reviewed at least once a year. Families, businesses, and policies all change, and you need to make sure you always have the very best coverage you can find for your dollars and cents.
Are you self employed? What health insurance option do you have, and do you think it’s the best for you and your family? Leave a comment below!