To find the best health insurance for the self employed you need to examine all of your options and then compare different plans to find the best level of benefits for the premium you can afford. Finding quality health insurance that is affordable is not an easy task.
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Group insurance policies make it easier, but self employed people do not have that advantage. Self employed people have limited options when it comes to health insurance, usually restricted to COBRA or private health insurance.
COBRA as Self Employed Health Insurance
If you quit your job to be self employed, COBRA may be an option for you during the start up phase of your new career. COBRA stands for Consolidated Omnibus Budget Reconciliation Act and it has been in existence since 1985.
Prior to this Act, employees who quit their jobs or were fired for any reason did not just become unemployed; they also became uninsured. Even employees who quit to take employment elsewhere had to go through a waiting period with their new employer, leaving them open at risk for a certain timeframe without any insurance for himself and in many instances, his family.
Ever since the government initiated COBRA, companies are required to offer extended insurance to employees to continue their insurance coverage past their termination date. Coverage can be extended to the employee and his family. Employers are not required to pay for their share of the premiums any longer, so the health insurance can become much more expensive, but at least the employee has the options of continuing on with his health care at least until other insurance can be procured.
The cost of COBRA is basically the employee’s share of the premium and the employer’s share of the premium. For example, if you paid $100 a month for your premium and your employer paid $200 a month for your premium, you would be responsible for paying the full $300 a month for your insurance through COBRA. Your benefits would remain the same and under this Act you would be able to continue with this insurance for up to 18 months.
Private Health Insurance for the Self Employed
Private health insurance is available for individuals and families, but since it is private it is sometimes more expensive than group insurance, especially for less health folks. This is because you no longer have the benefit of a group providing you with major discounts.
A company who has 100 employees can negotiate for a better deal with an insurance company because that insurance company is in essence obtaining 100 policies. There may be some high risk employees in that pool but there will also be some employees in there that will never use their benefits, giving the insurance company a lot more leeway with their rates.
There are many different levels of private health insurance available, especially with varying degrees of deductibles. The higher your deductible is, the less your premiums will be. This gives you some flexibility in choosing an affordable plan but it could also mean having some high out of pocket costs.
You can purchase individual or family health insurance with full coverage at a higher premium or you can purchase catastrophe insurance with a very high deductible but a low premium, or you can buy a policy that is somewhere in-between. The benefit to private health insurance over group insurance is the choice of selecting a health insurance plan that is more customized to your lifestyle and budget.
Other Options for Self Employed Insurance
There are some other options that may be available for the self employed. If you are self employed and have a working spouse then you may be able to get added on to your spouse’s group insurance plan. Sometimes increasing individual coverage to family coverage through a group plan is cheaper than purchasing a private health insurance family plan or paying for a separate private individual health insurance plan.
Another option that can be considered is if there is an association you can join that offers group insurance. Depending on your type of self employment or sometimes even your hobby, you may be able to find an association that you can join for minimal membership dues. If that association offers health insurance to its members then you can purchase the plan through them similar as you would with your employer.
Caution: some associations charge higher fees than if you were to simply buy a private health insurance plan, so be sure to review all of the benefits and costs before signing any policy.
The best way to find the best health insurance for the self employed is to first determine all of your options. If COBRA is available, find out how much your cost would be to see if it is feasible. Also find out the cost of adding yourself to your spouse’s plan. Look around to see if there are any associations that make sense for you to join that offers health insurance to its members.
Above all, look into private health insurance rates for yourself (and your family if needed) to find out what type of coverage you can get and for what cost. Private health insurance is one of the most common methods chosen for self employment because it usually offers the best coverage with the most flexible pricing when group insurance is not an option.
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