Health Insurance for Freelancers
So you’re sick of the cubicle, middle management and 9-5 hours. You dream of quitting and freelancing full time but there’s one thing holding you back: the company health plan. This is by the far the most common reason I hear from Americans on why they won’t quit the full-time job.
However, there are options available. In this article, we’ll look at several solutions to keep yourself covered without the backing of a full-time employer.
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
In 1986, COBRA was passed into law. It allows employees to keep their company health benefits should they, among other events that would end health coverage, resign or be terminated (for reasons other than gross misconduct.)
Of course, it’s not a free ride. If your health plan was being subsidized by your employer, you have to pay their portion as well as the amount that was being deducted off your pay-cheque. This can get pricey if your employer was providing a high-end plan but there is an option to change to a basic plan with no extras like dental coverage.
COBRA will generally cover an employee for a maximum of 18 months after being invoked, though that period will be cut off if premiums aren’t paid in a timely fashion, or if your (now former) employer discontinues the plan. The period can also be extended under certain circumstances, like long-term disability.
For more information, see the U.S. Department of Labor’s COBRA FAQ.
Chamber of Commerce
One of the most common ways freelancers get health insurance is from their local Chamber of Commerce. Your Chamber of Commerce exists to promote and support local business and that includes locally operating freelancers.
Most offer small business group packages for companies consisting of two or more employees along with individual plans for those who are self-employed.
Some even offer multiple packages to choose from, so it’s possible to shop around within the Chamber’s network. Contact your local group for more details.
Groups Rates Without the Rat Race
Make no mistake. When you’re employed, you’re still paying for your health insurance. It’s just a deduction off your pay-cheque and it’s cheaper since the company gets a group rate where the employees who don’t get sick subsidize the ones who do. It’s still possible to get a group rate even when your organization consists of yourself through various associations.
Freelancers Union offers group rates for freelancers in New York, New Jersey and Connecticut along with providing individual market plans for 30 other states.
Meanwhile, the National Association for the Self-Employed (NASE) provides a number of discount cards through their benefits plan along with an Association 105 Health Reimbursement Arrangement, which makes health insurance premiums and non-insured medical expenses 100 per cent tax deductible. According to their web site, it’s provided to members at no additional charge for the first year then at a discount for renewing members.
Besides organizations encompassing all freelancers, there are often niche specific associations that will also set members up with health plans.
For example, media freelancers can get insured through MediaBistro (they used to only offer coverage to New Yorkers, but now have plans for freelancers across the United States.) Freelance writers can also obtain coverage through the National Writers Union.
High Deductible Insurance
If it comes down to it, it’s possible to get low monthly premiums at the expense of a higher deductible, which can mean having to pay the first $5,000-$10,000 of medical bills before the insurance company picks up the tab.
It does sound scary, but it’s also important to shop around. Some plans, despite being high deductible, do cover preventative visits and other expenses. Plus, some coverage is always better than none. Consider what’s worse: getting into a sudden car accident and having to pay a $5,000 deductible or being stuck with a full $40,000 in medical bills?
Health Saving Account
For those who opt to go with a High Deductible Insurance Plan, as of 2003 you can open what’s called a Health Savings Account from a bank or credit union. You contribute money to be used towards paying the deductible portion of your insurance policy or any other qualified medical expense.
Contributions to the HSA can also be claimed as an “above the line” deduction to lower their taxable income.
Maximum contributions to an HSA as of 2007 are $2,850 for an individual policy and $5,650 for a family plan. The numbers are adjusted for inflation according to the United States Department of Treasury website.
Go Through An Insurance Broker
Aside from all these options, you can also go through an insurance broker who’ll deal with the insurance companies on your behalf and is supposed to find the best deal for your situation.
As with everything else mentioned in this article, it’s best to shop around and ask for references to find the most reputable broker in your area. This would also be the best option for someone whose situation might be more complicated due to something like a pre-existing medical condition that makes it difficult to get approved for health insurance.
Conclusion
As you can see, a multitude of options exist for finding health insurance outside of being a slave to a company. Of course, it’s important to remember that this is merely a list of options and you should do your own research before settling on a plan — especially if you’re looking for coverage for your whole family.
Also, one last important note: before agreeing to a plan, make absolutely certain to go over it to make sure everything you think is covered is in fact covered. There are too many horror stories out there about people who’ve endured catastrophic medical expenses over something they thought they were covered for but were not.
Original post by FreelanceSwitch.com