There are advantages and disadvantages to being self employed. While the advantages can be immense, one area that is a never ending negative is health insurance. Let’s take a look at how to get health insurance for the self employed person in the current market.
Self Employed Disadvantage
Unfortunately, the self employed tend to get the raw end of the stick in most states when it comes to health insurance. For example, groups of employees seeking “group plans” are given advantages such as automatic qualification, lower premium rates and favorable precondition rulings. You get no such breaks when you apply as an individual.
Private Health Insurance
The vast number of self employed individuals will simply buy private health insurance directly from an insurer. The key is to figure out the kind of coverage you need [single/family], the type of plan [HMO/PPO], the size of your deductible and the premium you can afford to pay. Once you have these numbers in mind, you should shop around to get the best prices.
The traditional approach to shopping one’s health insurance needs is to simply work through a health insurance agent. If you are confused about the process, need help evaluating the type of policies available or prefer to work face-to-face, then this is still the best approach to take. If you feel comfortable with the process, than you can also try buying coverage directly off the web where it is easier to shop for lower rates.
Given the seeming preference for all things internet these days, you might think buying a policy off the web is the obvious best approach. Perhaps. Then again, maybe not. Getting health insurance companies to honor their duty to pay for your medical care charges can sometimes be tricky. If you buy a policy from a random site online, you are pretty much on your own when dealing with the insurer. If you go through an agent, you can turn over any problem you are having to the agent and let them deal with it. Since most people have issues with their PPO or HMO sooner or later, an agent can be a very nice luxury. Ask the agent about the 2013 Health Savings Account rules as well so you can get an idea of whether or not that would be a good alternative for you.
Pros and Cons
To be blunt, there are very few positives to buying private health insurance directly as a self employed person. You are going to pay more than if you were part of a group. You may also have problems getting a policy regardless of price if you have pre-existing medical conditions. Given this, it is always best to investigate every possible strategy for getting into a group. In fact, let’s talk about one less well known approach to doing just that.
Group Health Insurance
Group health insurance is usually much cheaper and easier to obtain. Of course, you need two or more people to form a business group, right? Well, not always. If you are self employed, you should investigate whether trade associations or other industry groups in your business niche offer group insurance plans. Many do as a benefit of membership. You can join the association and then pick up group coverage through their plan while remaining independent in your actual business. You tend to get more comprehensive coverage at a lower price than you would buying individual health insurance, which makes this a much more attractive option.
Catastrophic Health Insurance
Another approach to health insurance that every self employed person should look into is catastrophic health insurance. Also called “high deductible health insurance”, these policies are some of the least expensive on the market. you would only be interested in this type of policy if you simply want coverage for some type of major medical cost such as being hospitalized or receiving a lengthy course of treatment for something unfortunate like cancer. If you have a family and kids who need constant medical attention, the high deductible health insurance policy is probably not a good choice unless combined with a health savings account. If you start one in the spring, an HSA can be the perfect answer for reducing premiums and taking control of health care costs. If you do some research you can often find that you can save enough on the cost of insurance to fund your HSA contributions.
As a self employed individual, you are definitely at a disadvantage when it comes to getting health insurance. That being said, you can get it. It usually just comes down to how creative you can get and what you can afford, so spend the time to investigate all your options.