Health Insurance Options for Self-Employed People
This article will take you through choices you have as a self-employed person looking for health coverage. Being in the open market can be somewhat difficult and overwhelming, especially if you’re someone who’s come from group coverage and is transitioning to taking care of it yourself. Hopefully I will be able to give you some guidelines so you’re able to make an informed decision.
So, What Are My Options, Actually?
- Marketplace, or also known as, ObamaCare or ACA.
- Private Insurance
- Short-term Plans
- Medi-share Plans
ObamaCare
By now, you’ve probably heard these terms, “ObamaCare”, “Marketplace”, “ACA”, and “Affordable Care Act”. All of these terms are the same thing. This is the federal health insurance that is available to all American citizens. Coverage here accepts everyone, regardless of your medical history. It is also priced according to your annual household income. Well, actually, it’s the same price regardless of your income – but, you get subsidies to help you pay for it, depending on your income level. This allows people with big families or lower income levels to be able to afford coverage if they’re not working for a company that provides it for them.
ObamaCare is a comprehensive type health benefit plan. That means that you have a deductible and co-insurance to help pay for your medical benefits. You have an out-of-pocket max, which is the cap that you’ll pay for medical expenses during the year. The out-of-pocket max protects you from having to pay hundreds of thousands of dollars if something major were to happen to you. If you need clarification of the terms used here, you’re welcome to take a look at this article, which covers these in detail.
It is important to note, that the deductibles and out-of-pocket max can be pretty high here. So, even though your monthly premium may be very low or even non-existent, you should be aware of the expenses you will still be responsible for, in addition to any monthly premium you may have. Some families have deductibles of $17,000 and out-of-pocket max’s of $24,000.
People who consider the ACA the most, are people with pre-existing conditions. As mentioned above, one of the benefits of the marketplace is that they do not look at your medical history before enrolling you in coverage. So, no matter what conditions you have, you will be covered – and they even cover those pre-existing conditions!
Enrollment for the marketplace only takes place at the end of the year. Typically November 15th until January 15th, but it’s always important to keep up with those dates as they may change slightly each year. This is ultra-important, because if you miss the deadline to enroll, then you cannot enroll any other time during the year unless you qualify for a special enrollment period. In order to qualify for a special enrollment period, a life changing event must have happened. Examples are getting married, divorced, loss of group coverage, adoption, etc. Once you enroll during the annual enrollment period, your coverage will then begin January 1 of the next year. You can visit Healthcare.gov to look around now and sign up when the time comes.
It is also important that you take a close look at your plan to determine the network it’s offering. Plans are not the same and the network is a key factor when deciding. The network you choose affects whether or not you can keep your doctors that you already have a relationship with. It also tells you whether or not you need a referral from your primary physician to see a specialist, or if they cover you out of state or not. Read this article for more detailed information on what the different networks are and what they mean.
A lot of self-employed people tend to steer clear of ObamaCare if they’re able. Typically, a self-employed person has an income level that exceeds eligibility for a subsidy, so the premiums are higher than that of a private plan. Also, self-employed people tend to travel more, so they need coverage that will work in other geographic areas. The flexibility and benefits of a private plan are usually much greater than ObamaCare. If you could get stronger, more affordable coverage elsewhere, why wouldn’t you?
Private Health Coverage
There are options outside the marketplace that may be a better fit for you. Private health coverage is more affordable monthly and offers stronger, more flexible benefits.
There is only one private plan option out there that offers long-term, guarantee-renewable coverage. That means, you’ll never be kicked off the plan if you’re diagnosed with a major illness. You do not have to go through any more enrollment periods. As long as you’re paying your monthly premium you will continue to have coverage. You may be subject to medical underwriting.
Typically, this coverage is about 40% lower cost than the marketplace. So individuals or families who do not qualify for subsidies save thousands on their premiums every year. Additionally, deductible options are much lower, ranging from about $2,500 – $10,000.
This plan offers you a PPO network – which means you can use it in any geographic location – even across state lines, which makes it great for travelers too! Having a PPO network also allows you to see any specialist without needing a referral from your PCP. You even have the Mayo Clinics and MD Anderson in Texas in your network so you have the best treatment centers for big diagnoses. In addition, a PPO network gives you a discount on all services received, before it’s sent to claims, saving you even more money.
Cash benefits for critical illness diagnoses are typically included, as well as options for accident coverage, short-term disability, term life coverage, vision and dental. These are all benefits not given to adults in the marketplace world.
Short-Term Plans
Any plan on the internet that you find, that is outside the Affordable Care Act, is a short-term plan. This is very important for you to understand, because they are not always advertised as a short-term plan and you need to understand why that would be important to you.
Short-term plans are a great option for people that have left one job and coverage at their new job does not start right away. This can offer them a “bridge” to get to new coverage at their new job. It would also be a good option if you plan to enroll in marketplace coverage, but it’s not that time yet.
In my experience, short-term plans are not usually suitable for self-employed people who plan to stay on the coverage long-term. Why? Because short-term plans are exactly that. Short term. They only cover you for a set amount of time – ranging from a couple months to 1 year. (Occasionally you find a plan that will cover for 2-3 years, but the risks are still present) This means that once your term is up, you have to re-enroll. So, any new conditions that have developed during this time will now NOT be covered on the new term – even if it’s the exact same plan you had last term. This can be a terrible situation for someone diagnosed with cancer or any other expensive, long term condition or illness. Now you have this pre-existing condition and your only option will be the marketplace. Even worse, if your short term plan ends at the beginning or the middle of the year, you cannot obtain ObamaCare coverage until that enrollment period and it won’t be effective until January of the next year. Going without coverage when you have an expensive illness – well, you get the idea.
A lot of people are enticed by short-term plans because the monthly premium is typically much lower than the marketplace or the private long term coverage. This should be a red flag for you. Health insurance is not “cheap” and if you find a plan you consider “cheap”, then there are probably risks you’re taking.
Additionally, it’s also important to know that many short term plans are indemnity plans. An indemnity policy is one where the health insurance company agrees to pay a set amount for the facility, physician, prescriptions, etc. After the insurance company pays that amount then you are responsible for all remaining medical expenses, no matter the cost. Not having an out-of-pocket max can be very risky and could cost you tens of thousands of dollars.
Medi-Share Plans
A Medi-Share policy is not an actual health insurance plan. It is a group of people who come together to pool their premiums in one place. Then, when a consumer has a qualifying illness or event, the pooled money would be used to reimburse the consumers expenses. The key point here is that the consumer is REIMBURSED. So, you have to be very comfortable paying up front for your medical expenses, no matter the cost, so that the hospital will treat you. Once you receive your receipt, you then file that yourself with the medi-share group. If they decide that event was qualifying, they should reimburse you. In my experience, I’ve seen several clients using a medi-share plan and not being able to receive cancer treatments because they did not have the money on hand to pay up front. This is risky. They were forced to wait for ACA enrollment to obtain coverage there, for pre-existing conditions.
Hospitals do not typically view Medi-share plans as health insurance, because they are not health insurance. There is no contractual agreement for the medi-share to pay your expenses. This results in a lot of denial of claims, and no treatment for the consumer. Hospitals do not have to treat you. If you cannot front the money, they will turn you away.
Again, Medi-share policies are enticing to people because they are “cheaper” plans. Remember – a cheap plan is probably a risky plan.
A Medi-share plan typically does not cover any preventative care or basic sick appointments or medicines. You have to be comfortable covering all of those costs in full. Of course, there are a lot of different Medi-share policies available now, so there may be some that claim to cover these services – always read the plan details before choosing any health plan.
Where to Find Coverage
Using a Health Insurance Advisor is recommended to show you your options. We have the expertise and knowledge to help you look at your options and review them all with you. If you don’t already have an advisor, I am happy to help. My services are free.
It’s also important to note that not every health insurance broker or agent has access to the private policy that is specifically made for self-employed people. Likewise, it is not anywhere on the internet for you to research on your own. You will need an advisor, like myself, to look at those plan options. You are welcome to set a time for us to connect here
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| Key Take-Aways There are plans available to self-employed people. You should read over and understand where all of your out-of-pocket costs will be coming from. You should understand the risks and benefits of choosing each plan. There are four main choices of coverage available to a self-employed person. A Medi-Share is not actually health insurance. Choosing a PPO plan will give you the most flexibility for your medical care |
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