Alternative Health Insurance for the Self-Employed

Employers are among the biggest sources of health insurance coverage, offering low-cost or free health insurance to employees and their families as an employee benefit. However, self-employed individuals and freelance workers generally lack the option to get insurance through an employer. Instead, they can explore a number of insurance sources in search of the best rates and the right type of coverage.

Significance

• Self-employed workers require the same financial protection from the cost of medical treatment as traditional employees or the unemployed. Health problems can come on suddenly, and the cost of medical care can rise dramatically in a short period of time. Medical costs are a major source of financial hardship for people who lack insurance altogether or don't have adequate insurance.

Types

• If you're self-employed, you can still compare multiple options for buying health insurance. Group insurance, which is what employers buy to provide as an employee benefit, is also available through some automobile clubs or social groups you might already belong to. Insurers also sell individual health insurance in many forms, with a premium that's based on your risk factors including age, gender and preexisting conditions. Individual health insurance also includes high premium health insurance, also known as catastrophic insurance, for the reasonably healthy self-employed who want basic protection at a low cost.

Benefits

• The key benefit to most types of health insurance for the self-employed is a basic level of coverage in the event of a medical emergency. Health insurance policies can offset the cost of ongoing treatment or reduce the price of co-payments for doctor visits and prescription medication purchases to a reasonable level. If you're self-employed and relatively healthy, individual health insurance may represent a savings over group insurance since you only pay based on your own risk factors and not an average that includes the risks of other members.

Drawbacks

• Some of the health insurance options for the self-employed have notable disadvantages. High premium health insurance may require you to pay several thousand dollars toward your own care before the insurance company begins to contribute. It may also lack any type of prescription drug coverage. Group insurance requires you to remain a member of the group that it applies to, which may mean annual dues or membership fees on top of the cost of insurance.

Alternatives

• Self-employed workers who don't find an acceptable health insurance face limited options. They include seeking full-time employment with a company that offers health insurance as a benefit, applying for insurance through a government-subsidized program or going without health insurance of any kind. Government programs include Medicare for those over age 65, and Medicaid for low-income individuals and families, regardless of their employment status.