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Health Insurance for the Unemployed

The escalating cost of health insurance is the most significant barrier to Americans who dream of starting their own businesses. Health care costs continue to spiral out of control and that is reflected in insurance premiums. Self-employed farmers, freelancers, contractors, seasonal employees and small business owners struggle to find affordable health coverage.

Fortunately, there are some reasonably priced insurance options out there for self-employed workers. The challenge is to find the one that best suits your needs.

A number of states recognize self-employed individuals and allow them the option to buy group health insurance on a guaranteed issue basis. This means that you cannot be denied coverage based on your medical history. To qualify, you must prove that you have been in business at least one year and have a verifiable gross income that is equal to or greater than the annual cost of your health insurance premium. Contact your state insurance commissioner to find out if your state offers group insurance policies to ”groups of one.”

If your state does not provide the type of coverage listed above you will want to buy individual health insurance. With this type of insurance, certain pre-existsing medical conditions may not be covered. They will also base your premium rates on lifestyle, tobacco use, age and home zip code. If you are in relatively good health, you may be able to find individual health insurance coverage at a reasonable rate. Fortunately, the self-employed health insurance premium is 100% tax deductible.

When you purchase self-employed health insurance, you are eligible to sign up for a Health Savings Account, a special tax-sheltered savings account that you can use to pay for qualifying medical expenses. You will likely incur penalties if you withdraw funds from the account for any purpose other than qualifying medical expenses.

Another option for self-employed workers is to check with trade, professional, alumni associations or chambers of commerce who may offer health insurance benefits to their members. Because there is strength in numbers, these groups are usually able to offer affordable options. Bear in mind that many of these types of plans are HMOs. Check to see if any of the associations you belong to offer health insurance. You can also call your State’s Department of Labor to get more information.

If pre-existing health conditions prevent you from getting health insurance you can enroll in your state’s high risk pool. This is a special state-created safety net for people with chronic health conditions and high health risks. With the high-risk pool you have access to comprehensive medical coverage but premiums tend to be very pricy. High-risk pools generally have a waiting period of 6-12 months on the coverage of pre-existing conditions.

After you turn 65, you may be eligible for Medicare benefits, even if you’re still working in your own business. Bear in mind that you may need supplemental health insurance to cover what Medicare doesn’t.

Some self-employed workers elect not to have any type of insurance coverage. This is very risky because even if you consider yourself healthy, an unforeseen injury or major illness could cause you significant financial losses.

If you prefer to deal directly with an agent for your self-employed health insurance, do your homework. Interview a few different agents, and compare the price and coverage of the self employed health insurance plans they offer. Before you sign anything or make any payments, check with your state insurance commissioner’s office to find out if any complaints have been filed against the agents or the insurers they represent. Ask a lot of questions. It is better to get your questions answered up front than to find out you may not be covered. For example, if the lifetime limit is $1,000,000 and you exceed that amount is the coverage still valid?

Finding the right self-employed health insurance can be difficult, but it is not impossible. There are new resources and plans that can ease the burden and enable you to achieve your dream of being self-employed without putting your health and assets at risk.

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