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
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
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.
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.
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
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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