Self Employed Health Insurance – The Cheap, The Expensive, and the Downright Ugly
If you are self employed and in need of health insurance then you have an abundance of choices ahead of you. There is individual health insurance, small group health insurance, discount plans, association benefits, and then of course the actual choosing of the best insurance company and the most comprehensive plan – all without breaking your budget! Just as it is key to get everything in just the right order when starting out on your own and forming your own business so too it is key to do a little research right now and figure out which type of health care coverage is best for you and your loved ones. Here is a quick primer:
Individual Health Insurance
If you are healthy and no one in your immediate family that will be on the coverage is pregnant then this is almost always the way to go. Why? Everything else being equal, individual health insurance is roughly half the cost of a comparable group health insurance plan due to the differences in underwriting (that is why if you are healthy then by all means take advantage of your good fortune and compare quotes to find some very attractive low rates).
Small Group Health Insurance
Most states require at least 2 people to form a small group although there are some exceptions so you if you are a sole proprietor and running out of options request quotes and speak with an agent that is knowledgeable about self employed health insurance. As stated earlier, group health insurance is much more expensive than individual health. However, the positive side is that even if you have a major health issue in your past they cannot turn you down and exclude that issue as a pre-existing condition (you must have had continuous coverage up to that point and other criteria sometimes apply differing from state to state).
Discount Health Plans
Stay away from these at all costs. If you find yourself backed into a corner and cannot obtain anything else I would even go so far as to say that you probably should sacrifice in other areas rather than taking the risk that all of your assets could be attached due to an unfortunate large medical bill (if you are doing business as a sole proprietor then you deserve a double dose of warning – request quotes in your area for an HSA or other high deductible health plan to save money on your monthly premiums).
You may often see these type of self employed associations pushed upon you by unscrupulous agents who are after a large commission. If an agent tells you that this is the only way to get lower rates or to qualify for special tax benefits then run! They are misrepresenting the facts. Regardless of whether you join an association, choose individual health insurance or group health insurance – so long as you have some schedule C income then you will be able to deduct 100% of your health insurance premiums up to your net schedule C income. (Tax laws change and your specific situation needs specific attention so speak with a qualified CPA or other financial advisor).
Source by Joel Ohman