Health Insurance Options for the Self-Employed

One of the most challenging issues the self-employed grapple with is finding affordable health insurance. Coverage trends toward the expensive whether it's for an individual or family. As a result, many people who are self-employed find themselves going without because they're not aware of all the options available.

COBRA, Short-Term and Interim Insurance
If you've just left your full-time job to strike out on your own, the Consolidated Omnibus Budget Reconciliation Act (COBRA) can buy you some time to purchase new coverage. Under COBRA, you're entitled to continue to purchase health insurance from your former employer for up to 18 months.

The downside is that COBRA often comes at a hefty price. While you're able to continue with your existing coverage, you'll lose any contribution your employer made to the plan and in some cases, additional fees that your employer was responsible for.

If you can't afford your COBRA insurance, you have the option of purchasing short-term or interim insurance to close the gap between leaving your job and finding the right policy for your budget and your medical needs. These policies typically offer coverage for six months up to one year.

Spousal and Partner Coverage
If your spouse or partner remains employed full time and has insurance benefits, have your name and the names of any dependents added to that policy. The monthly cost for that plan will increase to a family-rate, but that rate will likely be considerably less if you purchase a separate policy.

Health Savings Accounts
If you are willing to purchase a high deductible/low premium health insurance policy, you might consider participating in a Health Savings Accounts (HSA) toward which you make monetary contributions. Deductibles for these programs range from $1,000 to $5,000 for individuals and $2,000 to $10,000 for families, but the benefits of participating in an HSA include:

• Your contributions may be tax deductible
• Withdrawals for qualified medical expenses under your HSA provider's plan are aren't taxed
• Interest and other earnings on your account aren't taxed
• Unused funds roll over from year to year
• After age 65, you can make withdrawals from your account for any reason without being taxed

Shopping for Policies
If you choose to purchase an individual or family policy directly from a provider, take the time do your research and identify ways to structure the plan to keep costs low.

• Take the time to add up what you typically spend on medical care in the average before you begin shopping for a policy. You may find you're better off going with a higher deductible to lower your premium.
• Compare your project income to the cost of the health insurance options you're considering. You may be able to deduct insurance costs from your taxes provided your premium doesn't exceed the amount of income you generate during the year; however, if you're eligible for coverage under your spouse or partner's policy and opt out of it, you may not be allowed this deduction.
• Look at the costs of buying individual policies for your family members versus getting a family policy. You may actually be able to save money by buying individual policies.
• Ask if there's a discount incentive for your annual premium upfront instead of monthly installments.

Containing Costs Once You're Covered
Once you've found a healthcare plan that meets your needs, there are additional steps you can take to keep medical costs down if you're willing to think creatively. Does your community sponsor health fairs? If so, take advantage of the free screenings and other services they offer. You won't get a diagnosis, but you might get a nudge to visit your doctor if your results are outside the normal range.

You can also look to lower your prescription medications by ordering by the milligram instead of by the pill. If you're prescribed a 40mg dosages for example, you may find it's less expensive to purchase two, 20mg tablets instead.