I’m Self Employed. How do I get Health Coverage?
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A majority of my clients are transitioning from an employer plan to being responsible for finding their own plans; many striking out as a new business owners or self-employed individual. Navigating the world of health insurance can be confusing and overwhelming. With so many options available, it can be difficult to know where to start. In this article, we'll discuss some of the different health insurance options available to self-employed individuals and provide tips on how to save money on your healthcare coverage.
1. Individual Health Insurance Plans
Individual health insurance plans are available for self-employed individuals who do not have access to employer-sponsored health insurance. There are 2 types of individual health insurance plans: Underwritten plans, which look at the health history of its applicants, and Guaranteed Issue plans, which do not. Guaranteed Issue plans can be purchased through an Affordable Care act website, www.HealthCare.gov, while Underwritten options are more often purchased directly from an insurance company or advisor like myself. It is important to be aware that if you put your information online on any website related to health insurance, including HealthCare.gov, you will be called by multiple agents and salespeople and advisors. If you only want to be called by one person, or given the option to sign up for a plan yourself, go to www.McGarrityLLC.com and fill out your information there.
Without government subsidies, tax credits, or employer assistance, Guaranteed Issue plans tend to be more expensive because they take anyone and are, understandably, paying out more significant claims. They also have stipulations about when they can be applied for due to taking anyone no matter their health. Underwritten plans only take applicants who they determine are not oo much of a risk, so can be applied for any time and are, in general, between 25% and 50% less than comparable Guaranteed Issue options. All Indidvidual Plans provide a range of coverage options at varying price points, depending on the level of coverage you need.
When shopping for an individual health insurance plan, it's important to consider your healthcare needs and budget. Look for plans with lower deductibles and out-of-pocket maximums if you have frequent healthcare needs. On the other hand, if you are relatively healthy and only need coverage for emergencies, a high-deductible plan may be a good option. If you are a married, self-employed business owner with no employees, you may qualify for an HRA-105 Health Reimbursement Account, which can save you even more on your premiums and medical bills.
2. Health Savings Accounts (HSAs)
A Health Savings Account (HSA) is a tax-advantaged savings account that can be used to pay for qualifying medical expenses. To be eligible for an HSA, you must be enrolled in a high-deductible health plan. Self-employed individuals can contribute up to $3,600 (for individuals) or $7,200 (for families) to an HSA each year. Contributions to an HSA are tax-deductible, and withdrawals for qualifying medical expenses are tax-free.
Using an HSA can be a great way to save money on your healthcare expenses. By contributing to your HSA, you can lower your taxable income and save money on your taxes. In addition, if you don't use all of the money in your HSA each year, it rolls over to the next year, so you can continue to save for future healthcare expenses.
3. Group Health Insurance Plans
If you're a self-employed individual with employees, you may be eligible for a small group health insurance plan. They can also help you attract and retain employees by offering healthcare benefits. For groups of less than 25 employees, these tend to be more expensive than either individual or HSA options. If anyone in that group has major health issues and many claims on their insurance during the year, the cost of the group plan can increase significantly and, with more than one individual using it a lot, that increase can get unsustainable.
Once the size of the group gets over 20 or 25 employees, group plans become typically less expensive than individual plans and provide more coverage options. The more people who are on the plan, the more sustainable it is as people use it since increases in premiums due to claims can be spread out. It's important to consider the needs of your employees as well as your own healthcare needs. Look for plans with a range of coverage options and consider offering a Health Savings Account (HSA) to help employees save money on their healthcare expenses.
As a self-employed individual, there are many health insurance options available to you. By considering your healthcare needs and budget, and taking advantage of tax-advantaged savings accounts like HSAs and HRAs, you can save money on your healthcare expenses. Don’t hesitate in reaching out to me here, or another specific health coverage professional for assistance in selecting the best healthcare coverage for you and your business. Remember, don’t put your information online, especially during Open Enrollment, but do talk to someone who knows what they are doing with health coverage to help you make an informed decision about your coverage as a self employed individual or sole proprietor.