Finding Self Employed Health Insurance

June 1, 2010 by Frugal Dad

f employed insurance is not a difficult task in and of itself, the challenging part is finding affordable health insurance. If you are self employed, then you know how difficult it can be to find a great deal on insurance, especially if you are trying to cover an entire family with a range of health issues.

Finding Affordable Health Insurance

One of the most common methods of finding affordable health insurance is to work through an insurance agent. When working with an insurance agent it is important that you do plenty of homework prior to making a commitment. All reputable health insurance agents will allow you to interview them and compare their offers and coverage plans for self employed insurance options.

Prior to making any sort of commitment, or signing a contract or making payments to an insurance agent, it’s a good idea to check with your state’s Insurance Commissioner’s office. The Insurance Commissioner will allow you to search through past records and find out if any complaints have been filed against your agent in the past.

In addition to using an agent, a great place to start your search for health insurance is eHealthInsurance.com. However, I would caution against signing on the dotted line without someone in the field reviewing the details with you. The various options can be a little overwhelming to someone who doesn’t deal with insurance on a daily basis.

Health Savings Accounts

When choosing your plan it might make sense in your situation to choose an affordable health insurance option that requires you to pay a higher deductible, but then allows you to offset those costs with a tax-free Health Savings Account, or HSA.

Health savings accounts are a great way to save money if you are self employed. They work by allowing you to deposit pre-tax money into your account and use that account to pay for your medical services that aren’t paid for by your insurance policy.

This way, you are avoiding higher taxes on that money and setting aside money now in order to pay for your services later. Just keep in mind that the deductibles for these types of plans are quite high, so get a good emergency plan in place first.

COBRA Through a Previous Employer

Another way to keep health insurance if you are planning on becoming self employed is to take advantage of the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA. If you are currently working for a business that provides you with health insurance and are planning on working on your own, COBRA allows you to extend benefits for up to a year and a half after you have left your previous job.

COBRA can be quite expensive because you are essentially paying both sides of the health insurance equation. Employers are not required to pay any portion of the premium, but it may still be cheaper than having to switch insurance plans, especially if you may be subjected to some type of pre-existing conditions clause.

Warehouse Clubs and Trade Associations

An often overlooked source of health insurance for self employed individuals is trade associations. Many freelancer unions offer health insurance coverage options to their members, as do, believe it or not, warehouse clubs.

A quick check of the Sam’s Club Member Services area of their website confirms health insurance options are available for members. Costco also offers a variety of insurance options to members depending on which state you live in.

Taxes and Self Employed Health Insurance

One advantage of self employed insurance is that you may deduct insurance premiums from your federal taxable income. The government allows self employed workers to do this in order to level the playing field a bit, as large businesses are able to deem their health insurance premiums as a “business expense.”

If you have recently become self employed, it is always helpful to check your state’s health insurance laws. 34 states have created what are called “health insurance risk pools” that offer individuals and families to buy a special state-sponsored insurance plan if they are considered high risk or have pre-existing conditions.

If your state offers these types of plans then you should talk to a representative who can inform you of more details on these plans. Some states offer state-sponsored health insurance plans that have great benefits for affordable prices while others may not offer you the benefits you really need based on various factors such as the health of each family member, pre-existing conditions, etc.

Finding affordable insurance if you are self employed can be a difficult task that may require lots of research and interviewing. If you are in this situation it is important that you realize that adequate coverage is available for decent prices if you are willing to spend a little bit of time researching and asking questions.

Post by Frugal Dad


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