Health Insurance for the Self Employed - Part I
When my husband and I made the decision to become self employed - he is a logistics contractor for a huge company in South America - and I own a marketing and design company - we knew we were taking a risk with losing our great health insurance. I had the full time, 9 to 5 job with the salary, health insurance, and 401k. But after my baby was born, I could not bear to leave her to return to work full time. So I began freelancing, and lo and behold, it turned into an actual, thriving business.
Six months after my daughter was born, when our health insurance policy ran out, we immediately contacted our state officials about health insurance for my daughter. My husband and I, we could wait for ours, but we did not want my daughter to go one minute without health coverage. In my state, no child is left uninsured. So we set up a good plan for her, and then moved onto ourselves. Of course, my husband pulled his, “I don’t need it” bull, but I convinced him otherwise. At least if we had some kind of coverage, it would protect us if (God forbid) anything happened that would result in extremely high medical bills.
So I did my research and decided to go with the company I had had before, through my employer. (Anthem) I spoke to a live representative, as I found I could not get a real quote from any website online without talking to someone. And we set up the plan. We chose the high deductible plan because, quite frankly, the monthly premiums for any lower deductible were outright scary. The crappy part is, every doctor visit I’ve had (DH has not had to go) resulted in me paying out of pocket UNTIL we reach our deductible, which we’re nowheres near. (But I guess that’s a good thing). The good part is, is that the doctors/hospitals adjusted the costs to be much lower than they would have cost had I not had health insurance. For instance, I paid just $233 for a CAT scan (sinuses), which before the adjustment, would have cost me closer to $600. But, I digress. It could be just the sneaky way these health insurance companies work.
Anyway, back to how this is relevant to you. I know that with the high, high costs of private health insurance (those who do not receive health insurance from an employer), that this is a topic that can hold very strongly with you. Maybe you’re working for yourself and cannot afford health insurance. Maybe you are on the fence about a certain insurance plan/company. Maybe you are thinking about leaving your current employer but are hesitant because of the great health insurance policy you receive with the job. No matter what your situation, starting Wednesday, I will provide you with some insight into health insurance for the self employed.
If you have any specific questions beforehand, please let me know so I can address them in the next post! Thanks!
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In addition to a high deductible plan, you really should look into a Medical Savings Account (MSA) - pretty much every financial institution is offering them these days, and most of them could be called “medical IRAs”. Contributions are pre-tax, with some limits on how much you can stuff in there every year. A high-deductible plan, say $6K for a family, would reduce premiums to under $200/month. Fund the MSA from savings, and then make regular contributions from every receivable, shaving the amount off your tax liability.
In particular, please address pre-existing conditions. It’s important that people not be fooled into thinking they can get private insurance - at all - if they have a pre-existing condition. We have learned this the hard way.
Casey - thank you for your input on the MSA! That is something we are definitely going to look into!
Sonya - I will be sure to address pre-existing conditions in the upcoming postings on this.
Thank you both!
I have yet to find an MSA (aka HSA) that is also not attached to an insurance plan. I can’t get the crappy private insurance and therefor cannot benefit from a tax-free savings account. I am still saving for my own health care though, even though I will never be able to cover a catastrophic illness (my whole point in trying to get something in the first place) at least I can pay for basic doctor’s visits if needed.