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Self-Employed Health Coverage

Self-employed individuals have limited choices when it comes to health insurance coverage. You can buy an individual plan, start a group policy or forgo coverage altogether. According to the U.S. Centers for Disease Control and Prevention, nearly one third of self-employed adults choose the latter. However, even having coverage won't guarantee financial security in the event of medical catastrophe: in 2007, nearly 80 percent of people who filed for bankruptcy had health insurance coverage.

  1. Join a Group

    • A business group insurance policy costs members less because the financial risk for the insurance company is spread throughout the group. But when it comes to individual plans, there is a great risk of the insurance company losing money on that one insured customer. Joining a group policy will save you money and provide better coverage. There are several ways the self-employed can join a group plan. Contact your local chamber of commerce to learn if there are any local trade organizations in your field that offer health insurance plans as a member benefit. Should that prove unsuccessful, the National Association for the Self-Employed (NASE) suggests investigating whether you can form your own group. NASE says that in some states, groups can be formed with just two employees, including yourself.

    Understand Plan Types

    • Whether you join a group policy or purchase your own individual plan, there are similarities between both kinds. Group and individual plans usually give members a choice of joining one of four types of plans. The most expensive type is a Fee For Service (FFS) plan, which gives insured consumers a choice of doctors, hospitals and doesn't require referrals to specialists. A less expensive option is a managed care plan, which charges lower premiums than a FFS plan because it requires insured consumers to use doctors and facilities within a regional network, as well as get referrals from primary care doctors before making an appointment.

    Consider a High-Deductible Plan

    • One of the best ways to save money as a healthy, self-employed individual is to purchase a Health Savings Account (HSA) plan. These plans allow you to put non-taxable earnings into a savings account specifically for medical care needs. These plans typically have a high deductible (some as much as $15,000) that insured consumers must meet before medical coverage is provided. Some plans only cover annual physicals before the deductible is met, while others will cover nothing at all, such as pharmaceuticals. The amount of coverage usually correlates to the deductible amount. The biggest upside to a HSA plan is that your premium is much lower than other heath coverage plans.

    Use Different Types of Coverage

    • Instead of paying several hundred dollars a month for one health insurance plan, many self-employed people find adequate coverage by using several health care coverage types. For example, a person with a high-deductible plan that doesn't cover pharmaceuticals can turn to one of several national pharmacies offering heavily discounted generic drugs (some as low as $4 each). Self-employed people can also work with their doctors and dentists to offer cash discounts. Another option is using walk-in medical clinics and urgent care centers, which charge as little as $75 a visit, while an appointment at a university teaching school can offer even lower rates.

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