Insurance for the Self-Employed
Protecting Your Business's
line? If you run a home-based business you can't afford not to have health coverage
of one form or another.
how to make it happen, whatever your circumstances.
OPTIONS FOR THE SELF EMPLOYED You
have three basic options when it comes to health and disability insurance if you
are self employed.
your spouse has health coverage from his or her employer, as a general rule, use
that. It probably provides better and less expensive coverage than you could get
on your own.
main advantage of group health insurance plans is that they can't turn you away
because of health problems. The good news for the solo entrepreneur is that an
increasing number of companies are offering group health plans for "groups"
of one. This varies by state though so you'll need to do your homework to find
plans are fine if you don't have any pre-existing medical conditions. (If you
do, try your best to find a group plan that will cover a group of one.) They're
subject to medical underwriting so your state of health will be a factor the insurance
company takes into account in determining whether to accept your application.
Just because you're going it alone in your business doesn't mean you can't take advantage
of the group buying power that being a member of an association offers.
course, the mere fact that you're able to get into a good plan is one thing. Doing
so affordably is quite another.
THE HIGH COST OF HEALTH INSURANCE There
are several ways of minimizing the cost of health insurance. Your tolerance for
risk will determine which, if any, you are comfortable with.
the Level of Coverage
you really need to have every doctor's visit and prescription covered? If you
only go to the doctor once a year for an annual examination, have no health conditions,
don't need regular expensive prescription medications and are generally healthy,
consider cutting out coverage for office visits and prescriptions.
if you're reasonably healthy, don't visit the doctor very often and don't need
to use expensive medications, consider switching to a higher deductible to save
on premium costs. By increasing your deductible from $100 to $2,000, you can cut
your premium payment in half.
If you can afford to do so, pay your premiums annually rather
than monthly or quarterly to avoid service fees and to take advantage of prepayment
discounts where available.
because you're going it alone in your business doesn't mean you can't take advantage
of the group buying power that being a member of an association offers. Check
out your local chamber of commerce, various trade and professional groups and
small and home business associations for member benefits. Many offer access to
discounted health insurance. Here
are a few small/home business association links to get you started: National
Association for the Self-Employed National
forget to check out local associations in your area or associations relevant to
your particular profession.
to offer insurance products online means insurance companies save on broker and
agent fees. Often, this translates into premium savings for policies purchased
over the Internet. So, when your fingers do the walking, make sure they do so
on a keyboard and not the Yellow Pages.
the Health Insurance Portability and Accountability Act (HIPAA), if you're self-employed
you may be eligible to use a medical savings account, or MSA. MSAs
work in conjunction with higher deductible health insurance policies to reduce
premiums and allow you to use pre-tax dollars to pay for your medical expenses
up to the limit of the deductible on your insurance policy.
short then, MSAs offer a very tax-effective and potentially lucrative way to self-fund
part of your health care costs while dramatically reducing your premiums. If luck
is on your side and you remain healthy, by the time you reach retirement age,
your MSA could well fund your retirement. Pretty
Health Insurance Deduction
Finally, the self-employed in the USA have been
able to write off 100% of their health insurance premiums since 2003. That's only
so long as the total doesn't exceed the net profit from your Schedule C minus
deductions for one half of the self- employment tax and Keogh, SEP and Simple
contributions though. Also, the deduction can only be claimed for months when
you weren't eligible to participate in a subsidized health plan from another employer
including your spouse's employer.
TO DO IF YOU'RE UNINSURABLE The
foregoing is all well and good if you're able to get health insurance in the first
place. But what if you have a pre-existing condition that disqualifies you from
an individual health plan and you can't get into a group plan? In other words,
you can't get insurance at any price.
insurance plans, also known as risk pools, are state-funded plans and are an important
safety net for individuals who are denied health insurance because of a medical
condition. They're available only in 29 states though.
be eligible, you must be a resident of the state from which you seek coverage
(unless there's reciprocity between that state and the state you reside in) and
you must be able to prove at least one of the following:
that you've been rejected for similar health insurance coverage by at least one
presently insured with a higher premium; or
you're presently insured with a rider or rated policy.
will not be eligible for participation in a risk pool if:
you're not a resident of the state from which you seek coverage (again subject
to reciprocity); or
you're eligible for Medicare or Medicaid; or
you've terminated previous coverage in the plan unless at least 132 months have
since elapsed; or
you're an inmate of a public institution.
more information on risk pools in your state, contact your state health insurance
department, the national association "Communicating for Agriculture and the
Self- Employed" (1-800-432-3276) or visit http://www.selfemployedcountry.org .
the safety-net protections of the HIPAA may end up being "risk-pool"
Savings Programs Healthcare savings programs are patient advocacy programs
that minimize out-of-pocket healthcare expenses. They're not insurance policies
but rather programs that allow you to access networks of healthcare providers
for the same negotiated rates that large insurance companies enjoy. Savings range
from 20% to 50%. Not ideal but better than nothing. Also, since they're not insurance
policies, all preexisting conditions are accepted. A modest monthly fee is usually
required to participate.
health insurance may seem like a luxury you just can't afford if your finances
are already stretched to breaking point thanks to your home-based business, you
never know what's around the corner. Quite simply, you and your business can't
afford not to have health (and disability) insurance.
are your business's greatest asset. Protect it.