Health Insurance A Challenge For The Self Employed

Being self-employed takes determination, skill, self reliance and hard work. It also takes health insurance. For many looking to strike out on their own, the cost of obtaining insurance in the private market, if it can be had, is a major obstacle to deal with. Most entrepreneurs are busy struggling with the real challenges they face within their actual business. The time, and especially the money, spent on buying health insurance moves them away from what they need to be doing to succeed.

Rising Costs a Challenge

Most self employed people have left the security of a job for the excitement, fulfillment and hopefully the profit of a business of their own. However a large part of the security they left behind is in an employer sponsored group health care plan. Many employees do not realize the high costs their employers pay to provide them with health care. Health insurance costs have skyrocketed. The average cost of medical care and insurance for a family in the U.S. is approaching $20,000 a year. While employees are shouldering more of this cost, few see the grand total. The cost of insurance can be shocking to those looking to work for themselves.

For those just starting a business, the costs can be a major challenge. Most entrepreneurs struggle just to pay their most basic bills when first getting started, and large health insurance premiums may tragically persuade people to give up their dreams of self employment. This doesn't always have to be the case. There are ways to reduce the cost of health insurance for the self employed.

Use Tax Deductions

When looking at your premiums, keep in mind that they are tax deductible, so long as you don't have access to a group plan through an employer or spouse's employer. This tax break can significantly reduce your real cost of insurance. If paired with a Health Savings Account, nearly all of your medical costs and health insurance premiums can be written off your taxes.

If premiums still appear to be too high, consider purchasing a plan with a higher health insurance deductible.  You will have to make higher payments if you actually use medical care, but the cost savings from the lower premiums will help offset it. And if you don't use any medical care, you will have more cash flow to put towards your business.

Dealing With Pre-existing Conditions

Making a health care plan more affordable, however, is only one part of the puzzle. For many people with pre-existing conditions, it can be difficult to get self employed insurance whatsoever. This problem will be solved in 2014 when the Affordable Care Act requires all health insurance providers to disregard pre-existing conditions when accepting policies. But until then, there are still other options.

You may be eligible to continue under your previous employer's group plan under COBRA. COBRA is a temporary solution as in most cases it lasts for 18 months. It can also be very expensive as well since the employer is no longer making contributions.

Check to see if your state allows one man groups. In some states, a self employed individual can purchase a group plan, like large business have, even though they are the sole employee. In such cases, pre-existing conditions are not taken into account. However, in most states, the requirement for a group plan is 2 employees. If your business plan calls for adding employees, the sooner you do so, the sooner you can apply for a group plan.

If your state does not offer groups of one, and you don't expect to have an employee anytime soon, check to see if you are eligible for your state's high risk pool. High risk pools were set up in order to provide insurance to those that would not be offered any insurance plans in the private market. The high risk pools are not open to everyone and they still come at significant cost. However they are less costly then being sick and not having insurance.