Being self-employed presents itself with a unique set of needs especially if you have been used to working for a company with healthcare benefits. You will have to find health insurance on your own and find a policy that meets your medical needs and is affordable. A good place to start is by visiting www.healthcare.gov where you can find information about the new Affordable Care Act and how it affects those who are self-employed or own their own small business.
What are my options if I am newly self-employed?
If you have recently found yourself self-employed after having worked for a company with medical benefits for several years, you have some options. You can seek your own private insurance immediately or apply for an extension of your current policy through COBRA.
COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985 and allows workers to extend employer benefits for up to 18 months after leaving a job. This is not necessarily cheaper than purchasing private insurance though, because you will now pay your portion and your former employer’s portion of the cost for the insurance policy.
Where can I look for discounted insurance policies for those who are self-employed?
Depending on your business, you may qualify to join a trade organization or union. Many of these offer discounted health insurance policies to members. You might also consider becoming a member of NASE, the National Organization of the Self-Employed, which offers discounted insurance policies as well.
Some individuals who are self-employed or own a small business opt to join with others who are in a similar situation in order to form a group and purchase a group policy. In doing so, you can often receive a much less expensive rate for your insurance.
What are some other ways I can save money on insurance?
Self-employed individuals can save money on insurance by writing off the cost of that insurance on their federal income tax. Self-employed individuals are allowed to write off their premiums just as larger companies deduct these costs as a business expense.
You may want to consider opening a Health Savings Account (HSA), which puts away tax-free income towards off setting healthcare costs. In order to open an HSA, you normally must agree to an insurance plan with a high deductable, but then you can use the funds in that HSA to pay this deductable. With a high deductable, your monthly premiums will be less.
Will I be denied coverage if I am self-employed and have a pre-existing medical condition?
The answer to this question may depend on where you live. Thirty-four states now offer state-sponsored guaranteed issue insurance policies that are for high-risk individuals and groups.
Some states extend these guaranteed-issue policies to individuals and others offer them only for small businesses. Along the same lines, some states require insurance companies operating in their state to sell insurance to small businesses with less than 50 employees on a guaranteed-issue basis. In states where a small business is defined as 1-50 employees, you can use this if you are self-employed, or in other words, a business with a one employee.
As a small business owner, am I required to provide insurance for them?
The short answer to this is no. Small businesses with less than 50 employees are exempt from employer responsibility policies. That said, the federal government is now offering incentives for small businesses that choose to offer healthcare benefits to their employees.
In the past, according to www.healthcare.gov, small businesses have typically paid up to 18% more than larger companies per insurance policy because they were purchasing a smaller quantity of policies. Now, with these new incentives, small businesses can offset this additional cost through tax incentives offered by the government. Small businesses that go beyond offering policies to current employees and offer policies to retired employees can receive additional tax incentives.
Finally, beginning in 2014, small businesses with less than 100 employees will be able to get their insurance through an Affordable Insurance Exchange. Exchanges will be a new way that individuals, those who are self-employed, and those who own small businesses can get insurance at an affordable rate.
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