Are you self employed, or thinking about becoming self employed? Health insurance may be a big concern for you, especially if you have a family. According to the Employee Benefit Research Institute (EBRI), roughly 13.4 million Americans under the age of 65 receive their self-employed health insurance via the following options:

* 2.6 million have individual policies
* 3.5 million are insured through their own business
* 3.3 million are covered by their spouse’s insurance or by some other policy
* 0.7 million are insured as part of a public program
* 3.5 million are uninsured

Private insurance refers to both employer-provided group coverage and individually-purchased family coverage. Some typical health insurance plans include:

Fee-for-service or indemnity plans: These plans enable one to choose any medical provider for health care treatment. Following treatment, members must pay the bill and then send a claim to their insurer for reimbursement.

Managed care plans: These plans provide both insurance and health care services. Instead of paying every time a medical service is delivered, members pay a fixed monthly fee for health care, regardless of the amount of care needed. These plans additionally offer coverage for a variety of preventive services. Health Maintenance Organizations (”HMOs”) and Preferred Provider Organizations (”PPOs”) are among the most popular managed care plans.

HMOs often require members to use their contracted physicians and facilities. These plans consist of Point of Service (”POS”) options, which allow members to utilize medical providers outside the plan’s network and still qualify for partial reimbursement.

PPOs generally encourage members to use the medical providers within the plan’s network. Members are allowed to consult with providers outside the network, but will have higher out-of-pocket costs.

So what about HSAs?
Created by Public Law 108-173 and signed into law by President Bush on December 8, 2003, health savings accounts (HSAs) are designed to “change the way millions meet their health care needs because they are designed to help individuals save for qualified medical and retiree health expenses on a tax-advantaged basis.”

Who is eligible to open one? Any person over 18 who is covered by a high-deductible health plan (and has no other fist-dollar coverage) is allowed to establish an HSA. The tax advantaged contributions can be made in three ways:

1. the individual or family can make tax deductible contributions to the HSA even if they do not itemize deductions;
2. the individual’s employer can make contributions that are not taxed to either the employer or the employee; and,
3. employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction.

For individuals 55 and older, they are encouraged to save for health expenses after retirement and can make additional catch-up contributions to their HSAs. However, if and when that individual enrolls in Medicare, he/she is no longer eligible to contribute to their HSA.

Any and all amounts contributed to an HSA belong to the account holder are completely portable. Similar to an IRA, funds in the account can grow tax-free through investment earnings. Any funds distributed from the HSA are not taxed as long as they are used to pay qualified medical expenses. And unlike an FSA (flexible spending arrangement), unused funds are available for use in later years. (They do not expire at the end of the year.)

Check out some of these organizations for more info on health insurance for the self employed:

http://www.selfemployedweb.com/
http://www.ahirc.org/
http://www.nase.org

If you have any more questions/concerns on this topic, please be sure to let me know!

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Tags: be your own boss, business ideas, flexibility, health insurance for self employed, health insurance plans, high deductible, HMOs, HSAs, managed care, no health insurance, PPOs, telecommuting, work from home, work from home business