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Let’s say you decide to leave your full-time job with benefits and start your own business. Besides finding the right desk and desk chair, you’ll need to start looking for a new health insurance plan.
When you work for a company, it chooses the insurance plan you’re on and pays some or all of the monthly premium — or the cost paid for your health insurance. Plus, the human resources department is there to answer your questions as they come up.
It’s different when you’re self-employed.
“The responsibility for the self-employed individual is that they have to be their own HR manager; they have to figure out what they can afford,” says Jeff Baechle, vice president of Individual Market Product Strategy at UnitedHealthOne.
That doesn’t mean you have to navigate your health insurance options alone. Insurance brokers can explain the different types of health plans and help you find one that fits your needs.
You don’t even have to pay them for their services. Whoever provides the health plan pays the broker, but it doesn’t make them support one plan over another.
“There’s no incentive for us to overrepresent one company or another,” says Chuck Moline, a healthcare broker affiliated with MNsure in Minnesota. “We get paid the same either way. Our job is to match the right plan to the person’s need.”
Whether you go with a broker or shop on your own, here are some things to consider when choosing a health plan if you’re self-employed.
Know how long you’ll need your plan
The first question you might ask yourself is how long you’ll need the plan. If you just need coverage for a short time — say, until you get another full-time job with benefits or qualify for Medicare — a short-term health plan might work for you.
The terms will vary, based on what state you live in.
If you plan to stay self-employed for the long term, you might think about getting your health plan through the Affordable Care Act (ACA) marketplace. That’s a website run by the federal government on which you can buy health insurance. If you get a plan there, it could come with a premium tax credit (a type of discount) if you qualify.
ACA plans can be found either on healthcare.gov or through your state’s version of the marketplace (sometimes referred to as an exchange). You can also buy health insurance policies through a broker.
The great thing about ACA plans is that they must offer certain coverage such as emergency and preventive care. And they can’t deny you coverage or charge you higher premiums if you have a preexisting condition such as cancer or diabetes.
Be aware of what type of coverage you’ll need
The needs of a young, healthy adult just starting a career will vary from those of people who are married with three kids.
Someone who doesn’t regularly take prescription medications, doesn’t have a chronic medical condition, or goes to the doctor only once or twice a year might choose a plan with less coverage.
Short-term plans typically have lower monthly payments than plans that fit the ACA guidelines. But short-term plans can deny coverage for pre-existing conditions and set a maximum benefit amount (a limit on the services you can get that are part of your plan). You have to answer medical questions to apply for short-term insurance, and you need to check any plan you're interested in for its exclusions, limitations and plan provisions before you buy.
That means a heart attack might not be covered if someone had high blood pressure, a risk factor for heart disease, Moline said.
“Make sure you know what [your plan] doesn’t cover as opposed to what it does cover,” Moline suggests.
In contrast, an individual or family managing a health condition or seeking medical care several times a year might prefer the more robust coverage of an ACA plan. Those plans have to provide coverage for preventive visits as well as emergencies.
Another option is to get a TriTerm Medical insurance plan underwritten by Golden Rule Insurance Company. These are three-year plans, but they aren’t available in every state.
Some TriTerm Medical plan options offer coverage if you go to the hospital and need surgery. Others include coverage for doctor’s office visits and preventive care.
However, as a type of short-term plan, TriTerm Medical plans can deny you coverage for pre-existing conditions and can set benefit maximums.
Health insurance plans have a network that is made up of doctors and other healthcare providers that have a contract with the health insurance company. Some plans have large nationwide networks. Others limit the network to a certain geographic area or healthcare system. If you travel frequently or have business in different states, consider plans with a nationwide network. Short-term plans tend to have wider networks, Baechle says.
If it’s important that you keep your doctor, double-check that your doctor is in network for the plan you’re considering. An in-network doctor accepts your health insurance plan. You can call the health insurance company to confirm or check the website.
However, if you see a doctor or physician who’s outside your network, you might have to pay full price for medical services.
Know what it’s going to cost you
Your budget is an important factor in choosing a health insurance plan. And one budget-friendly aspect of being self-employed is that your health insurance premiums are 100% tax deductible. Check with your tax professional to see if you’re eligible. If you purchase a plan through the ACA, you might qualify for a premium tax credit, which lowers your monthly payment.
You also could qualify for what’s known as a cost-share reduction, which helps reduce your out-of-pocket expenses. These could include things such as your deductible, which is the amount you must pay before your insurance pays the rest. These could also include copayments or coinsurance — payments made every time you receive health services.
Even if your household income is too high to qualify for a tax credit, you can still purchase an ACA plan and pay the full price. Short-term care plans come with lower monthly costs, but they don’t qualify for tax credits.
Do you have employees you need to cover?
If your business has expanded beyond just you and you’d like to offer health insurance to your team, check out options from UnitedHealthcare.
“If you’re new to the whole process, I think it’s probably going to take a lot of time and energy to do the work that’s needed to make the right decision for yourself, so it’s probably best to work with someone,” Baechle says.
The TriTerm Medical coverage term is one day less than 3 years. In SC, plans are three 11-month terms. In IN and OK, plans are three 364-day terms. This coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage.
This policy has exclusions, limitations, reduction of benefits, and terms under which the policy may be continued in force or discontinued. For costs and complete details of the coverage, call or write your insurance agent or the company, whichever is applicable.