Have you ever wondered how health insurance works if you’re self-employed or own a small business? There’s no denying that health insurance can be a significant expense when you’re a business owner. However, there are several ways to find affordable coverage.
Here are seven affordable healthcare options to consider if you’re self-employed or no longer have access to a group plan.
1. Join a spouse or partner’s plan.
Many employers subsidize premiums as a workplace benefit. Plus, group policies are usually cheaper than private ones. So, if your spouse or partner has health insurance through an employer, hopping on their plan could be your best option.
However, be sure to double-check your plan options if you’re not legally married because some employers don’t offer domestic partner benefits.
If you’re under age 26, another option could be to join your parent’s healthcare plan. You could go this route even if you’re married, living on your own, or financially independent. The Affordable Care Act (ACA) will let you stay on their plan until your 27th birthday.
2. Enroll in a federal or state marketplace plan.
Your next option is to get health insurance through a federal or state marketplace, such as Healthcare.gov. These marketplaces were established after the ACA was passed, specifically for consumers who don’t have access to traditional employer-sponsored plans.
One downside is that open enrollment in the marketplace is from November 1 to December 15, with a coverage start of January 1. If you don’t enroll during this period, you typically must wait until the following year. The only exception is if you qualify for special enrollment due to loss of insurance, marriage, divorce, the birth of a child, or relocation. In this case, you have 60 days after the event to enroll.
In addition to Healthcare.gov, you can also get an ACA-qualified health plan directly from an insurance company, a health insurance agent or broker, or an online insurance aggregator. Two popular health insurers are Aetna and United Healthcare.
3. Consider a high-deductible health plan (HDHP).
A high deductible healthcare plan (HDHP) could be a good option if you’re relatively healthy. Your monthly premiums are low, but the disadvantage is that your out-of-pocket costs are much higher if you get sick.
If you enroll in an HDHP, it’s also a good idea to open a health savings account or HSA. Your HSA contributions are 100% tax-deductible and can be used on a tax-free basis to pay for qualified medical expenses, such as doctor bills, medications, prescription glasses, and more. That can save a lot of money.
4. Get a short-term health plan.
If you miss the enrollment period for an ACA health plan, you can buy a short-term health plan until the next open enrollment. That said, there are some drawbacks to short-term health plans you should be aware of:
- Not all short-term plans meet ACA standards. If yours doesn’t, you may face a state-mandated health penalty.
- They may charge more for preexisting conditions.
- They may cap benefits.
- They may not cover routine services like medications and preventative care.
Having short-term health insurance is better than having no plan at all, but you’ll want to look for qualified coverage as soon as possible if you use this option.
5. Enroll in Medicaid and CHIP (Children’s Health Insurance Program).
If your income is low enough, you may qualify for free or low-cost coverage through Medicaid or CHIP. To qualify, you generally have to earn less than the poverty level, which is currently $12,880 for individuals and $26,500 for a family of four.
Unlike ACA health plans, you can enroll in these programs any time of year. Learn more about this option at Medicaid.gov.
6. Get COBRA coverage.
If you leave a job with employer-sponsored health insurance, you can enroll in COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage. That gives you the same benefits for up to 18 months after leaving employment.
The main downside to COBRA coverage is that it can be expensive. Since employers aren’t required to pay for it, you’re typically on the hook for premiums, plus a 2% administrative charge. It’s also temporary, so you’ll still need to look for coverage once it expires.
7. Look for a group policy through a wholesale club.
While it may seem odd, clubs like Costco and AAA offer health insurance discounts to members. They essentially purchase group policies, then open the doors for members to join. You must typically meet fewer qualifications because it’s a group policy. And you may get additional discounts on prescription drugs and vision care as well.
If you’re already a member of one of these clubs, it may be worth looking into.
Health insurance shopping tips
Finding affordable health insurance as an entrepreneur can feel challenging. But it’s not impossible. Use these tips to find coverage that fits your budget.
And if you already have health insurance, shop around once a year to see if any competitors offer similar or better plans for a lower price. If you don’t, you could be leaving money on the table.