health insurance for solopreneurs

Health Insurance for Solopreneurs


You might have dreamed about becoming a solopreneur for a long time and now you’ve made it happen. You’re now a self-employed business owner, your schedule is booked out and you’re experiencing an increasing revenue line.

One area that could easily turn into a frustration point is handling items that your employer used to handle for you back when you were in an employee position. This would include:

  • Retirement savings options
  • Health insurance coverage
  • Life insurance

These to-do items are probably not high on your list of priorities when you’re working to land the next client or finishing a demanding project. There never seems to be enough time in the day to figure out how to find the best health insurance plan for you and your family.

That’s why this guide is here. Let’s take a look at the available health insurance options and ways to best take advantage of those options so that this situation gets handled.

Why is Health Insurance so Vital?

Making the decision to buy a health insurance plan is easy to avoid. The reason for this is that none of us think we’re going to get sick. When you feel healthy, it’s easy to assume that you’ll always feel this way.

Don’t make this mistake. There are two basic ways to learn in life. First, we learn through our own experiences. Second, we learn by watching how others solve problems. It’s likely that you’ve heard stories of people who are healthy today and suddenly get diagnosed with an illness tomorrow.

One of the best ways to avoid getting sick or developing a negative health condition is to get regular check-ups. This process allows you to spot any troubling developments that can be solved through early detection.

The most advantageous time to invest in a health insurance policy is when you’re healthy. Once covered, take advantage of covered doctor visits and screenings so you and your doctor know exactly where you stand in terms of your health.

Consider that medical bills are one of the leading causes of debt and bankruptcy in America. Buying a quality health insurance policy simply makes sense from both a health and a financial standpoint. Make a commitment that you won’t put this important decision off any longer.

Where to Find Your Health Insurance Plan

Solopreneurs have several options available when looking for a health insurance policy:

health insurance coverageUse a health insurance broker or agent. Visiting a local health insurance agent is a good place to start. An agent or broker has the ability to show you a variety of plans that might best meet your needs. Take the time to review all possible options and ask plenty of questions in order to fully understand which plan will work for you.

Find health insurance through an insurance exchange, or marketplace. You can visit your state’s marketplace website or to find out what types of plans are available through an insurance exchange. It might be possible to lessen your monthly premium expenses if you’re eligible for financially-assisted plans at an insurance marketplace.

COBRA is a possible option. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985 and it allows for former employees to get their insurance coverage extended upon leaving a job.

Have you left a job that provided health insurance coverage within the last sixty days? If so, check into this option. It’s possible to benefit from COBRA coverage up to 18 months after leaving your job. This will typically cost more than choosing another insurance option. However, it’s worth checking into.

It’s possible for a client to become a source of health insurance benefits. For example, do you write regularly for a paper? It’s worth the time to ask them if they offer health insurance benefits.

There are normally hourly requirements based on state regulations that require employers to provide health coverage after an employee works a certain number of hours. This might not be your best option if you don’t think you’ll work for a client long-term. However, if you are in a long-term working relationship, take a look at the possibilities here.

Organizations for Self-Employed Individuals

NASE, the National Association for the Self-Employed, might be an option. This organization has an annual membership for solopreneurs that comes with health insurance options built-in. Side benefits include savings when you shop at places such as LegalZoom, Office Depot, TurboTax or QuickBooks.

National Association of Health Underwriters

This organization has a database of more than 100,000 health agents all across America. You’ll get directed to agents in your local area that will show you plans specifically designed for solopreneur freelancers.

The Freelancers Union

This union provides group health insurance policies to its members. These group policies typically come with healthy discounts built-in. The Freelancers Union is free to join. Once you join the union, go on their website to browse the options available for health insurance.

Choosing the Best Plan for Your Situation

One of the biggest considerations around your decision to buy health insurance is to choose a plan that provides benefits needed without becoming too expensive. There’s no need to buy a plan with every possible feature and benefit when you might not need all those options included.

If you go with an insurance exchange, for example, you’ll find that these plans come with five possible tiers to choose from. The higher tiers cost more in terms of monthly premiums because they come with more benefits.

The plans come with names such as Bronze, Silver, Gold, and Platinum. If you’re relatively healthy, don’t need a lot of care and don’t qualify for financial help, you might choose a Silver or Bronze plan. If you need to buy a lot of prescriptions or have current health challenges, then you may want to look at Platinum or Gold options.

This is an area where visiting a health insurance agent might pay big dividends. There is a lot to consider when it comes to choosing the best type of insurance. Talking with an agent allows you to ask questions, get things clarified and makes sure you choose a plan based on the facts.

When you buy a health insurance policy from an agent or broker, it’s most likely that you’ll purchase an individual plan. Individual plans offer the most options when it comes to copayments, deductibles and prescription coverage.

insurance for solo business owner

These types of policies are highly customizable and give you the most flexibility with benefits provided vs required monthly premium costs. This is another reason for talking through all the possible options with an agent. You’ll have someone there to help you make a wise decision that fits your personal situation and insurance needs.

Two Common Types of Health Plans

You’ll most likely run into a choice between an HMO or PPO when talking to an agent.

HMO Plans

HMO stands for Health Maintenance Organization. This type of policy means you’ll need to see doctors who contract with your health organization. These plans typically focus on wellness and prevention. They also won’t usually cover care that is out-of-network.

PPO Plans

PPO stands for Preferred Provider Organization. A PPO plan is one that provides more flexibility than an HMO. You’ll normally pay far less to see providers that are in your PPO plan network. You’ll also be able to use hospitals, doctors and other providers that aren’t in-network if you’re willing to pay extra.

Questions to Ask Prior to Buying Your Health Insurance Policy

  • Based on the medications I currently need, will my health insurance policy pay for them? If it doesn’t, are there other prescription drugs that are similar to what I take that the policy does cover?
  • Will this policy pay for me to see my current doctor?
  • Can I add my family to the policy affordably?
  • Will I be able to manage my insurance needs online with this particular company’s website? For example, can I track claims, access customer service, etc so that I save time?
  • If I need a specialist, will a referral be required?

Consider an HSA Option

As you shop for your policy, think about getting one that is HSA compatible. An HSA is a Health Savings Account. If you choose a health policy with a high deductible, having an HSA attached allows you to use the HSA funds to pay for medical expenses that are your responsibility to pay for outside your policy’s benefits.

Any money that you deposit into an HSA stays in your account. If you don’t need the funds in any given year, the money rolls over into the next year. Inside your HSA, the funds are accruing interest until you need it for medical expenses.

Be Smart After You Get Health Coverage

Find ways to save after purchasing your health insurance policy. Work to get the most value from the plan you’ve chosen and lessened overall health care expenses. Here are some ways to accomplish this:

Make sure you see “in-network” doctors. This means that you go to doctors who take your type of insurance. While this appears obvious, you need to check that any doctor or test is covered in-network before proceeding. You don’t want to get your blood checked, for example, and be met with a large bill because the lab the doctor sent it to was out-of-network.

Find out the generic brand when you’re prescribed medications. Brand name medications are not always covered by your policy and have the potential to get you into a very expensive situation. Most health insurance policies will allow you to get the generic brand at a lower copayment cost.

Use your benefits. Take advantage when your plan covers a certain number of well-woman exams, annual physicals, lab work, vaccines, mammograms, routine screenings, etc. Keep your visits to in-network physicians and you’ll get all this work paid for by the policy.

Build a relationship with your primary care physician. If you ever find that you need a specialist, your plan is most likely going to require a referral from your primary doctor. Getting the proper referral has the potential to lower expenses and make sure that the specialist is also in your network.

Use Your Deductions to Save Money

When you work as a solopreneur, you get tax deductions for your health care expenses. Make sure that you take advantage of these deductions. Here are some tips regarding this:

You need to show a profit inside your business to get these healthcare-related deductions. Make sure you can show this profit at tax time. Deductions can only add up to the amount you earned from your business.

Another tip is to keep everything separate if you run more than one business. Don’t combine the income from each business in order to get deductions. This isn’t allowed. Know that you can’t deduct premiums if you have other health coverage. This would apply if you have union health insurance or COBRA coverage, for example. That extra coverage means you can’t use premium payments as a business deduction.

As you can see, there is a lot to think about when your goal is getting health insurance coverage as a solopreneur. The key is to avoid getting overwhelmed about the situation. Instead, use the above tips and information to start putting together a plan.

Will you seek coverage by going to an insurance exchange website and selecting the best plan? Or, will you go to an insurance agent, ask a lot of questions and make the most informed decision you can about buying an individual plan?

Either way, take it step-by-step and take your time. Once you make your decision, you’ll benefit from the peace of mind while healthy. As well, you’ll look back on your wise decision whenever your health fails and you’ll feel thankful that you have the coverage you need.

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