Introduction to Self-employed Health Insurance
Planning to maintain adequate self-employed health insurance is an essential step for any employee considering becoming self-employed as a consultant or in any other profession.
Following article provides some invaluable and practical guidance based on the experience of many individuals who have successfully made the transition from employee to self-employed consultant.
As an employee you will probably enjoy health insurance cover for both yourself and your family as part of the benefits of your employment. Furthermore, it is likely that your employer will subsidize the cost of the insurance premiums - you as the employee will contribute a relatively small percentage of the total cost, typically only 30%... Great when you're employed!
The cost of self-employed health insurance premiums will be funded by your business. The good news is that the expense is a legitimate deductible when calculating the taxable profits of your consulting business.
Do I need Self-employed Health Insurance?
Some might be tempted to waive self-employed health insurance in order to avoid the expense. This may be understandable because the premiums can be high depending on the age and health profile of you and your family.
The smart approach is to bite the bullet and make self-employed health insurance an absolute priority in your business planning. Aside from providing peace of mind for you and your family right from the start of your self employed consulting venture, you will only truly appreciate the huge value of health insurance if and when you need to claim.
Statistics evidence that for the self-employed, one of the primary causes of bankruptcies in the U.S. and certain parts of western Europe is unexpected ill health combined with inadequate health insurance cover. Falling ill as a self-employed consultant would represent a double edged sword in that your ability to work and earn consulting fees would be impaired, whilst simultaneously the expense of medical tests, treatment and rehabilitation could be financially catastrophic.
The first natural step is to quickly and easily source some basic information and illustrative quotes online.
The leading independent US online provider of health insurance for small businesses, individuals and families is eHealthInsurance which comes recommended by the National Federation of Independent Business, has established relationships with over 180 health insurance carriers and offers more than 10,000 health insurance products online. The site allows visitors in just s few easy steps to view quotes, compare plans side-by-side and apply for health insurance.
The following practical guidance and tips on finding and maintaining self employed health insurance should reassure you that the transition from employee to self employed consultant can readily be achieved whilst maintaining protection and peace of mind.
1. Relax - exercise your rights under COBRA
In the US, the health provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 gives employees leaving a corporate employment the right to keep their current health insurance cover for a period up 18 months at the same (lower) corporate group rates. This applies if the company you are employed with has at least 20 employees on the payroll and you were not dismissed but rather you chose to leave the business on your own terms.
Your rights under COBRA will enable you to secure self-employed health insurance during your initial period of self-employment. but be prepared for the premiums to be higher than your health insurance deduction as an employee, because your consulting business will also be paying the subsidized portion of the cost that was previously contributed by your employer.
For more information check out the US Department of Labor.
2. Simple forward planning to safeguard your rights
The law guarantees you access to self employed health insurance so long as you secure a new policy within 63 days of the end of your COBRA benefits period. If you miss this window and fail to act then your application for follow-on self-employed health insurance could be rejected or, if accepted, cover might exclude a pre-existing health condition for up to twelve months.
Self-employed health insurance can be a relatively complex field so a little advice from a qualified and experienced health insurance agent will probably pay back tenfold. To locate reputable health insurance agents in your area visit the National Association of Health Underwriters.
Meet with a couple of agents and compare the benefits and costs of the self-employed health insurance products they recommend and before making a contractual commitment be sure to check the insurance commissioner's department in your state to check the service and complaints track record of the insurers they represent.
4. Lateral thinking
If you are married and your spouse is working it is quite likely that you will be eligible to join your spouse's health plan. This may well cost less than most other options including taking the COBRA route.
5. Strength in numbers
As your consulting business grows, and if you choose to recruit employees, then fairly rapidly you will be able to negotiate corporate membership discounts with self employed health insurance providers. This benefit will of course be enjoyed by both you and your employees.
Our mothers always advise us to look after our health. and if you are at the point in your professional career where you have sufficient experience to transition to working as an independent consultant then, with all due respect, you are unlikely to be in the first flush of youth!
Self-employed health insurance should be regarded as a necessity rather than a discretionary expense; peace of mind and protection of your income, assets and lifestyle are important for yourself and your family.
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