As increasingly more Americans are going to work for themselves, starting small businesses or working as independent contractors, the need for self-employed health insurance is on the rise.
Unfortunately, health insurance for the self-employed tends to be more expensive than employee-offered group insurance plans. This may be why well over half of all self-employed Americans don't carry an insurance policy. While this saves them money in the short-term, it can be financially disastrous when they find they need to go see a doctor.
Getting Group Insurance
Group insurance is cheaper because everyone in the group increases the group's purchasing power. Most people get group insurance from their employers, but it's not the only way. Those who are self-employed do have some group insurance options. You can get group insurance plans from some trade or professional groups, civic organizations and churches.
For those who are just becoming self-employed, you can keep your group insurance plan for up to 18 months with a program called COBRA. COBRA simply extends your employee-offered insurance policy until you can get on your feet and find your own. It can also help you make the transition to a new insurance plan. For more information, and to see if you are eligible for COBRA, have a look at their website at www.cobrainsurance.com.
One way to save money on your insurance is to use your working spouse's group insurance plan. If you spouse works for a large company whose insurance plan extends benefits for families and spouses, you may be able to get on their insurance. This is a good option for those who are just starting out with their own business. It's not individually tailored to you, but it will save you money that you can spend on your start-up costs.
Getting Your Own Individual Plan
While looking for a good individual health insurance plan, remember that you are in control. Shop around and interview the insurance agents. There are lots of options available to you, and many companies to choose from, so don't go with the first good one that comes along.
You also have to read the fine print and understand every detail of the health plan they offer you. When you are looking at different companies, check with your state's insurance commission office to see if any complaints have been made against the company. This is a good way for you to find out if a certain insurance company is reputable or not.
Low Premiums, High Deductibles And Big Savings
Many self-employed people choose an insurance plan with low premiums and high deductibles. This means that what you pay each month is very low, but you end up having to pay more when you go to the doctor. Most people are eligible to start a health savings account. This is a tax free account that you can use when you need medical attention.
By saving money on your premiums but instead putting that money into a tax-free health savings account, you save money in the long run on your health insurance. When you have to pay those big doctor's bills, you can roll over the money from you health savings account.
You'll also have to make sure you get disability insurance. This is in case you are injured on the job and unable to work. Companies usually provide this, so self-employed workers have to take out a plan for themselves.
These work pretty much the same as insurance plans. You can choose between group and insurance plans. Usually, there are trade or profession specific disability insurance programs, where the risk of the entire profession is factored into the rates. These usually offer the best deal to self-employed workers.
When your business starts taking off and you hire employees to work for you, you can take out a group insurance plan for them, and cover yourself too. This is what small business owners usually do, and it saves them money.