Categories: Insurance

What You Need to Know About Self-Employed Health Insurance Options

Historically it’s been the case that the self-employed are also the ones paying the most for health insurance. This might not be so bad in the short term, especially when you’re just starting your business and money is tight, but in the long run life’s calamities usually find a way to catch up to you.

So where do you start?

For many, the first stop is to an online health insurance brokerage that sells health insurance plans from the major carriers. Usually their websites function a lot like a health insurance version of Travelocity, where you can search generally or specifically for health insurance plans then compare them against one another to see how they match up.

In fact the concept is very similar to the planned health insurance marketplaces that will be coming as a result of the Affordable Care Act (ACA), or Obamacare, as it’s more commonly referred to as. More on that later.

But what other options do you have if you’re not looking to spend a whole lot of money on a private individual insurance plan?

Joining your spouse’s health plan

If your husband or wife has a job with great benefits, this should really be your first option. Being added onto their plan is going to be much cheaper than getting a whole new one on the open market.

Join COBRA

If you’ve just recently been laid off or left a job with health insurance, then COBRA is an option for you. The program lets you stay on your old job’s health insurance plan for up to 18 months as long as you take over full responsibility for paying the monthly premium.

Medicaid

Medicaid, if you’re not familiar, is government sponsored insurance for those who cannot afford private market insurance and who meet the requirements of the program. Usually there is a maximum annual income level that’s measured using your income against that year’s definition of the federal poverty line (FPL).

Insurance through a professional group

Groups and unions like the freelancer’s union or your local chamber of commerce can also be options for getting health insurance. Depending on your work you can also look up bar and trade associations in your area to see if they offer their members health insurance.

The Affordable Care Act

The ACA considers all self-employed workers to be individuals for the purpose of health insurance. That means you’ll have to comply with the individual mandate to have health insurance or pay a penalty. Next year that penalty will only be $95, but it will increase every year according to the rate of inflation.

If you make between 100 percent and 400 percent of the FPL then the maximum you’ll have to pay for your health insurance is 9.5 percent of your annual income. The less you make the lower that percentage will be. Any gap between your maximum contribution and the actual cost of the health insurance plan will be made by a tax credit.

The ACA will also expands the Medicaid program in those states that want it. So far 26 have either said they will expand Medicaid or they’re leaning toward expanding it. In those states that are expanding the program, the income eligibility for Medicaid increases to 133 percent of the FPL and single childless adults will be able to apply for the first time.

Michael Cahill is the Editor of the Vista Health Solutions Blog. He writes about the health care system, health insurance industry and the Affordable Care Act. For more information about the ACA may affect small business owners,  visit the Vista Health Solutions self employed health insurance guide. Follow him on Twitter at @VistaHealth

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.

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