Health Insurance for Self-Employed Individuals
In addition to running a company, small business owners must be self-reliant when it comes to finding health insurance. If you cannot depend on a spouse to provide access to benefits, you'll need to understand the available options for self-employed individuals and decide which health plan works best for you.
Finding the Best Plan for Self-Employed Individuals
The Affordable Care Act called for the creation of resources to help self-employed workers find insurance options. The Health Insurance Marketplace website lists plans for sole-proprietors who run a business that generates income but doesn't have employees. Small employers, or those with one to 50 full-time equivalent employees, should look at the Small Business Health Options Program, or the SHOP marketplace.
In addition to the Marketplace options, you may also contact local insurance companies or brokers for information on healthcare plans. If you belong to a professional association, health benefit options may be offered to members. However, given the changing legislation and regulatory climate surrounding association health plans, you should take steps to understand your individual responsibilities and the amount of medical coverage you'll receive before enrolling in this type of health insurance.
Analyzing Your Options
If you're considering several plans, it may be helpful to create a spreadsheet comparing costs and coverages. Generally, Marketplace plans don't vary in quality of care, but in the ratio between your monthly premium and out-of-pocket costs. If you choose to pay a higher premium, you'll likely pay less out-of-pocket when you receive care. Health plans may also be structured as an HMO, PPO, or High-Deductible Plan. If your plan offers higher benefits for in-network care, you'll want to check with your doctors and specialists and ask if they accept your new insurance. You can often narrow down some of the choices based on your typical health plan usage and the number of people in your family who need coverage.
The next step is to finalize your plan selection and begin the enrollment process. If you've recently lost coverage through a previous job, you'll qualify for a Special Enrollment Period and have a certain amount of time to enroll in health insurance. Once you make a selection, you cannot change plans until the next open enrollment period, unless you experience another qualifying event. When enrolling in a healthcare plan, you may be asked to provide documentation confirming your loss of previous coverage, such as a letter from your prior employer or insurance company.
Although many plans for self-employed individuals offer comprehensive benefits, you'll likely pay more for healthcare coverage compared to insurance offered through a large employer willing to share costs as part of a benefits package. Although the amount of coverage you'll need can be unpredictable, with so many different plans available, you should be able to find one that works best for you. When looking for a plan, try to estimate your costs based on ongoing specialist visits, daily medications, and other procedures you expect to undergo in the future.
Handling the Costs of Health Insurance
When you're self-employed, health insurance may become one of your largest expenses. Setting aside a portion of your income to cover healthcare premiums and out-of-pocket costs will help support your needs. You can contribute to a Health Savings Account which allows you to make tax-free withdrawals for these expenses. To help manage costs, self-employed individuals and small business owners may qualify for tax credits when paying for healthcare insurance.
Although insurance is a costly expense, there are options available for self-employed workers. During open enrollment, take the time to learn about which affordable plans best fit your needs.