Keep Health Care Costs Down When You're Self-Employed

By Alden Smith

Being self employed puts a person in a position of having difficulty finding a health care plan that will suit his or her own personal needs. Not many options are currently available, and seeking coverage can be difficult. Finding the best deal for your premium dollars may take a bit of searching, but it is doable for the self employed.

Health Savings Accounts. One of the options available is the purchase of a high deductible health insurance policy combined with a health savings account. This has dual advantages for the self employed, and mainly for tax purposes. The money paid into a health savings account is non taxable, and because it is structured like a savings account, the money placed into it can result in a sizable amount of savings over a period of a few years if one stays healthy. A little known fact is that family members can contribute to a health savings account on the behalf of another member.

Regardless, the money in the health savings account can be used for such things as routine doctor visits, lab tests, and annual checkups. The money saved by investing in a health savings account can more than offset the money invested in a high deductible policy, making affordable health care in reach of the average self employed person. And not only is the health savings account a good tax shelter, but the price of premiums paid for the health coverage can be deducted on your taxes. A word of warning, however - if the income for self employment is from a Schedule C business, and Line 12 on Form 1040 reports a loss for the year, you are not eligible to deduct your health insurance premiums.

Group of One Coverage. Another option to look into is an insurance policy labeled "group of one." In the group of one insurance policy, the self employed individual is given access to policies that are sold to other employers, and for the most part gain all the protections under the law attached to those policies. Over 30 states now have group of one coverage. The state laws specifically state that the small employer is assured health coverage on a guaranteed issue basis, and that the person in the group of one cannot be turned down for health insurance regardless of the status of their health. If you are one of the lucky people living in a state that has group of one status, simply research health care information online.

In states that offer this coverage, self-employed persons can gain access to policies sold to other small employers and enjoy some or all of the legal protections that attach to those policies. Specifically, small employers must be sold coverage on a "guaranteed issue" basis. That is, they cannot be turned down by insurance companies because of the health status of anyone in the group.

Evaluate your business when you begin searching for coverage. If you feel that your company may grow to a size where you might need employees at a later date, then look to a temporary health plan. Many reasonably priced temporary plans are available, as long as you are aware that they should never be kept in place as long term coverage. Know your business and growth potential, and go from there. At a later date, when your business becomes profitable and you need to hire employees, you should be in a better position to be able to afford more comprehensive coverage.

People who work for themselves come in many different categories and health situations. There is no such thing as a policy made for each and every person. But health insurance should never be a luxury. The Internet has made insurance and insurance options more readily available than ever before. A search for your specific insurance needs will reveal a host of companies and policies with every option imaginable. And because of the availability of many different types of policies, competition for your insurance dollars will be stiff. It pays to shop around. And always remember, you need to have an insurance policy in place before you get sick, not after. To protect you, your business, and your family, check out the many policies available today.

Alden Smith is an award winning author and regular contributor to DoItYourself.com. He writes on a variety of subjects, and excels in research.

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