Advances in technology have made it possible for more people than ever to be their own bosses. It is exciting to think that you could be self-employed. However, there are some downsides to being self-employed. One of those is that you don’t get the health care benefits that come with a more traditional full-time job.
Once you leave your job, you find out how expensive COBRA can be, and you realize just how much of your bill was subsidized by your employer. As you look for ways to ensure that your family is covered (and you do want health insurance for your family), even though you are self-employed, here are some of the options to consider.
Maybe you are going the self-employed route, but your life partner still has a full-time job. Check into that health plan. It may be that you can receive coverage through your life partner’s plan. While some companies require that you actually be married according to the laws of your state, others provide partner benefits to the person you designate. Find out if your partner’s plan is affordable, and whether it makes sense for you.
There are a number of professional organizations and guilds out there. Check around for professional associations in your field. There are national associations for small business owners, and for those who are self-employed. As a freelancer, I could join The Freelancers Union. Chances are there is some organization that can help you find a group rate on your health insurance, making it an affordable purchase for you, even if you are self-employed.
Maybe you decide to go with an individual plan, or you decide to join an available group plan. One of the ways you can make the cost more affordable is to boost your deductible. The higher your deductible, the lower your monthly premiums. As long as you don’t have costly chronic conditions, or high recurring health care costs, a higher deductible can save you money while still ensuring that your needs are met.
You can also combine your high deductible plan with a Health Savings Account. Put the money you save from deductibles in a tax-advantaged account that can grow over time while you save on your insurance premiums. Run the numbers and see if this makes sense for you.
Another possibility is to choose a health insurance plan with limited coverage. There are plans that only cover catastrophic medical situations. You can also find plans that cover pre-existing conditions, or that protect against a particular problem. Depending on the state you live in, and what’s available to you, you might be able to get a smaller plan, or a subsidized plan, that costs a little bit less.
It’s often possible to find plans that cut out some of the extra costs. Consider your coverage needs, and what you use. Drop coverages you don’t need, and concentrate on those that you do need. You’ll have a cheaper plan in the long run, and save more money.
When state insurance exchanges go online in 2014, you might also be able to find some good deals on different levels of coverage.
Don’t forget that there are tax advantages associated with paying for health insurance as a self-employed person. You can deduct some of your premium expenses from your income, helping to ease some of the burden. Additionally, if you have a Health Savings Account, those contributions are tax-deductible. So, if you plan things properly, you can deduct a good portion of what you pay in health care costs from your income come tax time. It’s not as good as a credit, but it still helps.
Make sure that you understand the contribution limits on the HSA, and the deduction that you are allowed to take on your health insurance premiums. If you have questions, you can talk to a tax professional.
Even though you are self-employed, it is possible to get health insurance coverage. There are a number of choices available to you, as well as strategies for reducing your costs.
Photo by Jasleen Kaur.
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I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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