If you’re self employed you may be wondering what your options are for health insurance. As an entrepreneur there are several options available at different price points.
Marketplace Plans for Self Employed
If you are self employed, one of the first options is marketplace insurance. Under the affordable care act (sometimes referred to as Obamacare) all plans offered on the marketplace cannot discriminate against pre-existing conditions. Plans must offer services deemed essential benefits and many of these are offered at no charge.
Tax Credits
Many people are eligible for tax credits when enrolling in a plan through the marketplace. Basically, if your income falls below a certain threshold for your household size, you’ll be eligible for a tax credit which can be reflected as a discount on your monthly premiums. Many people are able to save thousands of dollars per year with these tax credits. You’re going to want to try to lower your MAGI as much as possible to ensure the best savings. Try working with an accountant to ensure that you’re maximizing your deductions. You may also want to work with a broker to make sure you are picking a cost friendly plan that matches your needs.
Types of Plans
There are many options on the marketplace. You can choose from PPOs (more flexibility, higher costs), HMOs (less flexibility, lower cost) or EPOs which are somewhere in between. Additionally, there are four metal tier categories:
- Bronze
- Silver
- Gold
- Platinum
The metal tier is not indicative of the coverage, but rather the cost share. Essentially, your insurance carrier will pay for a portion of your medical services and you’ll pay for a portion. If your carrier is going to contribute more to the cost share, usually this will be offset by a higher monthly premium and vice versa.
- Bronze 40/60
- Silver 30/70
- Gold 20/80
- Platinum 10/90
Lower monthly premiums may sound attractive, but make sure to pick a plan that suits your needs. You may also be able to select a HDHP with HSA for further savings, but again, work with a broker to make sure your plan goes beyond the superficial appeal.
How & When to Enroll
You can peruse all the plans available on healthcare.gov at any time. Open enrollment is every year Nov. 1-Dec. 15 or longer dependent upon your state. You may also qualify for a special enrollment period if you’ve undergone certain qualifying life events namely:
- Change in insurance
- Change in location
- Change in household
Short Term Medical Insurance
The truth of the matter is, even with premium tax credits, marketplace insurance can be a little more than people want to spend. This is especially true if you only use your insurance for basic needs. If this is the case, you may want to look into a short term medical insurance plan (sometimes referred to as catastrophic coverage plans). Short term plans offer many of the same benefits as marketplace plans including:
- Doctor’s visits
- Prescription drug coverage
- Hospital procedures
- Out of pocket maximums
- And many, many more
Benefits
Additionally, short term medical insurance plans also usually offer nationwide PPO coverage which can be difficult to come by in a marketplace plan. If you are self employed and your work involves travel, this can be a major perk! Also, short term medical plans are much less expensive than marketplace plans (especially if you don’t qualify for a tax credit). A young healthy person can enroll in a plan for as little as $100! And you can customize them to meet your needs.
Downsides
Short term medical plans are not for everyone! Some important details to remember about short term plans:
- Are only available for a period of up to 36 months, at which point you’ll have to enroll again
- Are not available in all states
- Do not cover pregnancy
- Do not cover pre-existing conditions in the first year of coverage (or possibly at all dependent upon the condition)
- Are not ideal for families with young children
Still, for a reasonably healthy entrepreneur, they are an excellent option for health coverage at a lower cost. Should you experience a medical emergency of some type, you will be covered and the out of pocket maximums will limit your responsibility for large medical bills. You’ll need to work with a broker for short term medical insurance plans because they are not listed on healthcare.gov
Dental, Vision, Etc…
Other than basic health insurance, people certainly have other health needs that may require insurance. Many of our clients and viewers are especially concerned about dental insurance. If you are purchasing a plan through the marketplace, you can certainly choose a plan that offers dental and vision coverage or you may be able to add it on. That may not be your best option however. Many find that the add on options on the marketplace can be rather limited. For the most bang for your buck, you may want to look into private insurance.
For example, dental plans usually range from $15-$50 per month. Should you choose a private plan, you’ll have many more options available to you including far more PPO options. Again, for private insurance, you’ll need to work with a broker. If you’re going to pursue an add on to your marketplace plan, you can peruse the available options on healthcare.gov.
Additional Options for the Self Employed
Many people swear by health sharing ministries. It’s not something we can really speak to too terribly much because it’s not technically insurance. Some people have had great success, but there are also many scary stories out there, so proceed with caution. It can be appealing to forego health insurance for a time being and perhaps you will be able to get away with it for a short time. There are a myriad of different low cost clinics and even apps that can help manage your health needs. However, the truth of the matter is health insurance is there as a safety net. Emergencies can happen even if you’re young and healthy, so we strongly encourage you to weigh risk and reward if you’re considering foregoing health insurance.
If you’d like to learn more, give us a call at iHealthBrokers at 888-918-0518 or schedule a call today. Our services are 100% FREE!
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
