Sunday, January 9, 2011

Where to find affordable health insurance for the self-employed

7:35 PM |

There are some exciting life changes happening in my world. My wife, Linda, is “retiring” from her job at our church and coming to help me with managing CPF and some other entrepreneurial ventures. While I am really excited, I am currently wading through some of the health insurance options that are available to self-employed business owners and I now have a little better understanding of why some people use this health insurance issue as a reason to avoid self-employment.
Lest you think I am some kind of expert on this topic, I will just warn you – I knew nothing about it yesterday and know just about nothing about it today. I often begin writing an article knowing little about the topic and use the research as a method of educating myself.
So yesterday I spent a couple hours just reading as many articles I could find about health insurance and what other self-employeds are doing out there. From my reading it is a challenge to find a great solution. Paying a lot of money seems the punishment for not finding a good option.

So because I haven’t nailed down what we are going to do, this is going to be a little bit of a brain dump of ideas I have come across so far…
I’ve always wanted to get an Health Savings Account (HSA) because of the nice tax benefits. In order to get one you have to have a high deductible health insurance plan – which would work out great for us, because we have a decent sized emergency fund built up and rarely visit the doctor.
However, we are looking at having kids sooner than later and from what I hear babies cost a little bit of money! And with a high-deductible plan we would probably be nickel-and-dimed for a couple years after conception.
Knowing babies could be in the mix, it becomes a balancing act of finding a fairly low deductible plan, but without going too low, because that could cost you more than your house payment each month.
Then you have the coinsurance gamble. This is the amount you pay (as a percentage) after the deductible is covered. You can get a much better rate by having a higher coinsurance amount, but it’d be a terrible thing to have a catastrophic illness while having a 40% coinsurance.

Get on a group plan
The one recurring theme I found, is that the best way for someone self-employed to save on health insurance is to be part of a group plan. I haven’t dug into all these options yet, but some of the ideas I saw mentioned were…
■Local Chamber of Commerce
■A local trade association
■Freelancers Union (this only seems to be available to a few states)
■Sam’s Club
■National Association of the Self Employed

Alternative to health insurance
A while back I wrote about a Christian health insurance alternative called Medi-Share. They are a medical sharing group that has been at it since 1993. If you aren’t a Christian and don’t live by their biblical lifestyle – you won’t be accepted into the group. But, by being so strict on the standards of who is accepted, the members don’t have to pay out to cover a lot of expenses that normal insurance companies do (alcohol and tobacco related illnesses, abortions, STDs, etc.). Therefore, the members typically end up paying quite a bit less than they would for similar coverage with a health insurance company.

Getting Quotes
One website that I noticed kept on getting mentioned was eHealthInsurance – which is basically an online broker. You just go to their site and pick your specifications for what you are looking for in a health insurance provider and they provide a list of providers which you can display by price, deductible, coinsurance, etc.

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