Health & Dental Insurance for Self-Employed

With the rising costs of medical care, health insurance coverage makes quality health care an affordable necessity. And while most people get health and dental insurance through an employer-sponsored plan, coverage options do exist for self-employed individuals. Both private and government-administered health and dental plans can provide individual insurance coverage for the self-employed.

Individual Insurance Plans

• In the case of health and dental coverage, insurance companies offer group plans and individual plans. Employers, associations and churches can offer group plans to their members or employees. Group plans typically cost considerably less than individual plans because insurance companies can spread out the cost risk across a pool of people. With individual plans, insurance companies can't spread the risk, so the costs are higher for the insured. As a result, qualifying for individual coverage is more difficult, especially if a person has pre-existing health conditions.

COBRA Coverage

• The Consolidated Omnibus Budget Reconciliation Act of 1985 -- also know as COBRA -- provides government-sponsored provisions for extended healthcare coverage once a person leaves an employer-based health plan. Under COBRA, individuals can receive health and dental insurance coverage for up to 18 months after leaving an employer-sponsored plan. The only drawback to this lies in the significant increase in premium payment costs through COBRA. In effect, employers pay anywhere from 75 to 85 percent of the health plan cost under an employer-sponsored plan. As a result, a self-employed individual assumes that cost in premium payments when covered under COBRA.

Pre-Existing Conditions

• When qualifying for individual health insurance plans, pre-existing conditions can pose a considerable risk when viewed from an insurance company's perspective. Companies can refuse to insure a person altogether or tack a rider provision onto a policy that excludes coverage for any treatments related to a pre-existing condition. In the case of dental coverage, pre-existing conditions are not an issue; however, waiting periods may apply if a considerable amount of dental work is needed. Depending on the state a person lives in, self-employed individuals who maintain their COBRA coverage can transition into an individual health insurance plan and obtain coverage for pre-existing conditions.

State-Sponsored Plans

• State-sponsored health insurance plans provide ways for self-employed people with pre-existing conditions to get health insurance coverage. Some states offer guaranteed-issue insurance plans through private insurance companies. In effect, the law in guarantee-issue states requires companies to provide coverage for those considered "uninsurable." Some states also have health insurance risk pools, which are state-sponsored plans. Both guaranteed-issue and risk pool plans exist as the insurers of last resort and in some cases carry significantly higher rates than standard individual health plans.