Insurance & the Self-Employed

Unlike those who work for a company that offers insurance benefits, if you're self-employed, you have to foot the bill yourself. That bill can be hefty, indeed, with employer-based health insurance costs in 2008 averaging more than $12,000 annually, according to the National Association for the Self-Employed. When choosing providers and options, however, there are ways to cut costs and save on your bottom line.

Tax Breaks

• As a self-employed business owner, there are various tools available that you can choose to not only manage your health care costs but also take advantage of certain tax benefits. If you're in a high-deductible health plan, or HDHP, according to the National Association for the Self-Employed, you can supplement that plan by opening a health savings account, or HSA. You or your employees can fund the premiums and costs associated with your HDHP on a pretax basis; funds that aren't used in that year can be rolled over to the next. Other tax advantages include enrolling in a flexible spring account for health care. If your spouse works in your business part- or full-time, consider using a health reimbursement arrangement, or HRA, which allows you to deduct his medical expenses.

Pharmacy Costs

• One of the most expensive aspects of health coverage is the cost of pharmaceuticals. According to Blue Cross/Blue Shield, you should look for a plan with an affordable copay and an option for generic drugs. The National Association for the Self-Employed recommends getting your physician to prescribe the least expensive drugs and, to cut costs further, look into paying through mail-order services that provide you with a several-month supply for a lower cost.

Coverage

• The types of coverage and options you choose can greatly impact your bottom-line cost. Examine the menu of coverage options and determine if you need them all. An example given by Blue Cross/Blue Shield is child care delivery. If you don't think you'll need coverage in the near future for services such as child care delivery or even services such as physical therapy, look to drop that coverage or limit the scope. You can also opt for higher copay on primary physician, specialist and emergency room visits; higher deductibles for health costs; and a higher percentage of payments for services such as blood tests and X-rays. The more you think you can absorb out-of-pocket costs, the more you can save on costly monthly premiums.

Managing Your Health

• Saying "don't get sick" is a bit too flippant, but managing your health care can be a proactive way to reduce costs. Schedule regular "well" visits with your physician so you can manage chronic and costly conditions such as high cholesterol, high blood pressure and asthma. Manage your weight properly with exercise and diet, and look into quitting such bad habits as smoking and drinking alcohol. According to the National Association for the Self-Employed, a 2010 report showed that people who were moderately obese paid between 20 to 30 percent higher in health care costs so there's a dollar sign attached to your weight and a benefit in savings to being proactive about your health.