Obtaining Health Insurance for the self-employed is difficult and expensive. The self-insured do not have the benefit of group rates like large employers. This puts them at a disadvantage regarding insurance premiums. Insurance for group rates takes into account the overall health of the entire group which tends to balance out. When insurance looks at the self-employed they only consider the health of the individual and/or family members. This drives up the premium costs. There are many options for the self-employed depending on their healthcare needs.
COBRA may be an option for the newly self-employed. If you had insurance through an employer then your coverage can be extended for up to 18 months. The disadvantage to this is that the employer will no longer pay a part of the insurance premium so there will be a big jump in your premium costs.
Another option is to buy an individual policy thru an HMO or PPO.
Although these can be expensive they offer good coverage for families and also offer protection from large medical bills from and illness or injury. These options both charge co-pays for office visits and depending on the plan they may also have deductibles and coinsurance. Policies can be tailored to fit the needs of the insurance purchaser.
Fee for service plans are also available to the self-employed. Payments are made at the time of service so there are no large monthly premiums. This type of plan does not cover routine or preventative services so this would not benefit families. This insurance works well for those who rarely see a physician since payments are only made when the service is needed.
Opening an HSA account is also an option for paying for healthcare. HSAs are Health Savings Accounts. These can be set up when an individual or family has a high deductible health plan (HDHP). Money deposited to the HSA pays the HDHP premiums and the rest is used for paying deductibles and also for future medical expenses. With this type of account the money can only be used for qualified medical expenses. The funds in the account that are not used in the current year are carried over.
Catastrophic Health Coverage is an option for a healthy self-employed individual. This type of plan pays hospital and surgical charges which are caused by an illness or injury, but does not cover routine services. This coverage can be considered more of a protection against large medical bills.
All of these options have advantages and disadvantages. Careful research will allow the self-employed to find the health insurance plan that best fits them and their family.
Self-Employed Medical Insurance