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How to Handle Self Employed Health Insurance Opportunities
January 11, 2020
How to Handle Self Employed Health Insurance Opportunities

How to Handle Self Employed Health Insurance Opportunities

Being your own boss comes with plenty of perks. You can control your hours and set your own schedule. Also, you get to decide how to run your business and who you’d like to work with. In addition, you have the potential to earn an unlimited income.

While working for yourself is great, it does come with some drawbacks. One of them is having to buy your own health insurance policy. Let’s dive deeper into what goes into self employed health insurance so you can make an informed decision.

The Struggle Of Health Insurance When Self-Employed

When you work for someone else, you may qualify for an employer-sponsored health insurance plan. Your employer will pay for a portion of (or even all) of your health insurance coverage. This is a huge benefit as funding your own health insurance policy can be very expensive. 

As a small business owner, you’re the employer. Therefore, you don’t get the benefit of an employer-sponsored plan. Instead, you’re on the hook for finding a plan that aligns with your budget and healthcare needs.

Unfortunately, finding self employed health insurance is easier said than done. You’ll have to do your research and consider all the options at your disposal. The best option will depend on a number of factors such as your location as well as the age and health of who will need to be covered.

As you start to compare your options, you’ll likely discover that health insurance premiums for self employed individuals are quite high. This is particularly true if you had an employer-sponsored plan in the past and are used to more affordable coverage. Due to this, you may have to revamp your budget and make room for such a large expense. 

The good news is that you can save money on taxes with the self employed health insurance deduction. If you’re eligible, you can deduct up to 100% of your health, dental, and long-term care premiums for you and your family. 

Self Employed Health Insurance Opportunities

Fortunately, there’s more than one self employed health insurance policy available. In fact, there are numerous opportunities out there.

Remember that your financial and health situation is unique. Therefore, an option that may work for a fellow entrepreneur may not make sense for you. Here are some tips that can help you make a smart decision on self employed health insurance.

How To Do Your Due Diligence and Research

It may be tempting to go with the first health insurance plan you find. However, doing so can cost you significant money and stress down the road. Take the time to do your research and weigh the pros and cons of each option.

The National Association for the Self-Employed offers a form that allows you to explore various health insurance policies. Another great resource is the Freelancer’s Union, which features a questionnaire to help you discover the ideal opportunity. 

In addition, Healthcare.gov provides the Individual Health Insurance Marketplace with self employed health insurance plans for people who own their own businesses.

Marrying Into Your Health Insurance

Do you have a spouse with an employer-sponsored health insurance plan? If so, they may be able to add you on to their plan. While this will increase their monthly premiums, it’ll likely be more affordable than purchasing an individual policy. Do the math and determine what is more cost-effective. 

According to a report from the Kaiser Family Foundation, 99 percent of large companies with 200 employees or more and 97 percent of smaller companies offer health insurance for spouses. So, while there’s no guarantee your spouse’s employer will allow this, there’s a very good chance.

If you have children, some companies many offer family plans as well.

Marrying Into Your Health Insurance

Consolidated Omnibus Reconciliation Act (COBRA)

COBRA requires employers to offer you health care and dental coverage for up to 18 months when you leave your job. While this may sound great, COBRA comes with one significant drawback: it’s expensive. 

You have to pay for the entire cost of your COBRA health insurance out-of-pocket plus a 2 percent administrative fee. The Kaiser Family Foundation found that the average cost of employer-sponsored health insurance premiums was $6,896 for an individual in 2018.

If you recently left an employer to embark on self employment, COBRA may provide you with relief from sudden change. It can also give you the chance to stick to the same health insurance plan you had before.

Professional Organizations/Unions

There are a number of professional organizations and unions that offer health insurance as a benefit to their members. Here are some examples.

  • Writers Guild of America West (WGAW): The WGAW represent writers in producers in the film, TV, and new media space. If you earn a certain amount each year through your work, you may be eligible for health insurance through WGAW. As of July 2019, that figure was is $39,463.
  • Association for Computing Machinery (ACM): The ACM for coders, developers, and other computer professionals. The organization partners with Healthinsurance.com to offer health insurance for its members. As a member, you may qualify for short-term health insurance and dental plans.

Consider Consulting With A Health Insurance Broker

A health insurance broker can take the time and hassle out of finding the best health insurance for self employed. They are licensed at the state level and trained to help clients find health insurance. They can inform you of possible options for your situation and educate you on coverage and pricing for each one. 

With a broker by your side, you’ll find it easier to understand the terms of a policy before buying it. A broker can help you avoid unwanted surprises because they’ll clearly outline premiums, deductibles, and co-pays you’ll be responsible for.

Pulling The Trigger on Medicaid

Depending on your household income, you may be able to get health insurance coverage through Medicaid. Medicaid is a federal and state program designed to help lower income individuals with medical expenses. You can find out if you qualify by visiting the Health Insurance Marketplace. 

While Medicaid covers essential benefits like doctor visits, lab tests, and hospital care, it doesn’t pay for everything. Prescriptions, physical therapy, and eye care are a few examples of other benefits that aren’t offered in every state. Visit Medicaid.gov to learn more about coverage in your state. 

Breaking Down The Affordable Care Act

Also known as Obamacare, the Affordable Care Act (ACA) was enacted in 2010. Its purpose is to provide affordable health insurance coverage for all Americans. The ACA also strives to protect customers from health insurance company tactics that may restrict care or make it more expensive. The most noteworthy benefits of the ACA include:

  • Greater affordability: Under the ACA, health insurance companies are required to spend at least 80 percent of their premiums on medical care. Also, they cannot make unreasonable rate increases.
  • Coverage for pre-existing conditions: Before the ACA, pre-existing conditions like cancer and diabetes made it hard for people to get health insurance. The ACA states that you cannot be denied coverage because of a pre-existing condition.
  • More screenings covered: The ACA believes in a proactive approach to healthcare. Therefore, it covers more screenings and preventive services that can help you delay or avoid major health issues.
  • Less expensive drugs: There’s no denying that drugs are expensive. Every year, the ACA is increasing the number of prescription and generic drugs it covers.
  • Easier shopping experience: It’s a lot easier to shop for and compare health insurance policies thanks to the ACA and the Health Insurance Marketplace. 

Do I Really Need Health Insurance?

Health insurance for self employed individuals is expensive. It can also take some time to find the right plan. So, is it worth it? The answer is yes!

While it may be tempting to forgo health insurance as an entrepreneur. Doing so, however, can leave you with serious financial hardship down the road. 

Even if you’re in good health today, a health issue may strike and require you to pay thousands of dollars out-of-pocket. This can wipe out your savings and put you in a difficult situation. With health insurance, you can protect both your health and finances. 

At Fora Financial, we strive to help small business owners like you succeed. Sign up for our newsletter today for more small business tips. 

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Frequently Asked Questions

What is the self employed health insurance deduction?

The self employed health insurance deduction allows you to deduct up to 100 percent of your health, dental, and long-term care premiums for you and your family.

How can I benefit from COBRA?

If you left your job to work for yourself, you may be eligible for COBRA coverage. COBRA can give you health and dental insurance for up to 18 months. However, you’ll be on the hook for its full price, plus a two percent administration fee.

What can I expect from a health insurance broker?

A health insurance broker can help you find the best self employed health insurance options. If you lead a busy life and don’t want to navigate self employed health insurance on your own, they can help.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].