Insurance For The Self-Employed

The biggest concern I hear from people who are thinking about starting, or already have, their own business is the lack of medical insurance. What most people don't know is that there are many options available that will allow you to have both medical and dental insurance without having a large company paying most of the premiums.

When you go looking for health insurance, you need to know the four main types.

* Fee-For Service. With this plan you pay a percentage of the cost with every doctors visit. The standard is 80/20 where the insurance company pays 80% and you pay 20%. You must meet your yearly deductible, however, before the insurance company begins paying anything. Most deductibles range between $200 and $1,000. The higher the deductible the lower your monthly premiums.
* Health Maintenance Organization (HMO). HMO's usually have no deductible, but you have to make a co-pay for each visit. The co-pay usually ranges between $5 and $20. With HMO's you can only go to doctors that are members of the HMO. You select a primary physician who coordinates all of your medical care and who will refer you to any specialist you may need to see.
* Preferred Provider Organization (PPO). As with HMO's, there is usually no deductible and you have a co-pay for each visit. You must choose a doctor that's a member of the PPO to get full coverage. You can go to a doctor who's not a member, but you will have to pay more, usually about 20% of the cost. PPO's give you more freedom of choice, but the premiums are usually higher than with an HMO.
* Point of Service (POS) plan. It's similar to a PPO, but if you want a primary care doctor to coordinate your medical care you can select one.

If you are leaving a company where you had insurance then you should check out COBRA. The federal government set up the COBRA program for employees, and their dependents, of companies with at least twenty employees. If you leave your company, or are laid off, then you can continue your health insurance for between eighteen and thirty-six months. These rates are higher than you have paid in the past, though. You will not only be paying your share of the insurance premium, but also the amount your employer used to pay. For example, with one company I was laid off from, my monthly health insurance premium would have jumped from $25 to $239. If you have a lot of medical bills, this may be well worth the cost.

If your spouse has insurance, you should look into putting yourself on their policy. Many times you don't even have to be married. You can be added under "Significant Other" coverage.

Check with any organizations you belong to. I can get insurance through several writing organizations, as well as my college alumni association. Some people join an organization just to take advantage of an insurance program they offer. If you look around, you will find that almost every field has at least one organization representing them. Many of these organizations offer some kind of health insurance.

There are other nontraditional sources of insurance too. The credit union I belong to offers inexpensive life insurance. Actually, they give me $1,000 of life insurance at no cost. My credit card company offers many forms of insurance at no cost, including car rental, travel, health while on trips and more. Check all of these sources to see what they offer. One way to find places to check into is to look into your wallet. What cards do you have there? Clubs, organizations, unions, credit cards, alumni associations and more.

There is also a membership discount store in my town called Sam's Club. It's like a Costco or Fedco. They offer a dental discount program. It's not insurance, but for about $70 a year I can become a member. I get a discount card that I can take to participating dentists, and get their services for a discount. The only drawback is that most of the dentists in the program are in large cities. Be sure to check this out before you join to be sure your dentist is part of the program.

There are ways to get medical care that is free or inexpensive without using insurance. In my town, there is a health clinic that has a sliding scale based on income. There's also a dental school in town that has very inexpensive rates if you let the students work on you. I know people that drive for over an hour to use this facility and they think it's wonderful.

In Arizona, there is also the AHCCCS Program (Arizona Health Care Cost Containment System) which offers low cost insurance for low-income households with an annual income of up to $18,000. Check with your state to see if it has a program like this.

Consider an option that requires no insurance. Put money into a bank account. I know of one person who put $2,000 into a bank account before starting her own business. The money would be used for any medical expenses. Over the next two years, she put another $8,000 into the account. So far, this has taken care of all the medical problems that have arisen for her family of four. If you want even more security, you could set up a savings account, and have catastrophic insurance coverage with a high deductible. Just decide what you are comfortable with. I usually go with the minimal coverage because I have virtually no health problems. I'm in my late forties, and in the past twelve years I have only gone to a doctor once and I take no medication. The only recurring health problem I have is getting new glasses every five years or so, and having the occasional filling. I've always been very healthy and I don't see this changing any time soon.

One last note about insurance. If you are going to have clients coming to your home, you should look into liability insurance with medical reimbursement coverage. I had this several years ago when I ran a photography studio out of my house. Fortunately, I never had to use it, but I did come close one day. A woman came in for a portrait and brought her friend, who also had a one-month-old baby. As we were getting ready, I told the mother that she and her baby could sit in a chair across the room. I pointed out a very bright orange extension cord and told her to be careful. She looked at the cord and said she would be. She then proceeded across the room and tripped on the cord. Visions of her falling on top of her baby flashed through my head before she caught her balance. Everyone was fine, but I was very glad that I had the insurance, just in case.

What you need to do, as a self-employed person seeking health insurance, is to be creative and look everywhere. Contact every club, credit card and organization you belong to, and don't forget the college you graduated from. Call your city and state government to see what programs they offer too. Use that same creativity that keeps your business successful to find all your options, and then select the one that's best for you. Be sure to read the fine print so you know what is, and isn't, covered by a plan before you join.