Health Insurance Options for the Self-Employed

Tips for Finding Quality Medical Coverage for a Small Business Owner

Sep 17, 2009

In today's society, health insurance rates for the self-employed are outrageously expensive. What other options does one have to obtain good medical coverage?

For many people, choosing the best health insurance plan is a challenging task. But for the self-employed, finding the appropriate health plan is doubly difficult. Fortunately, there are many insurance options available for a small business owner. The important thing is to carefully evaluate these options and choose the one that is most beneficial.

Invoke COBRA if Possible

For the person who has left a job to start a new business, it is best for him to keep his present coverage for a while, if it is offered. A person is entitled for health coverage under his old employer-sponsored group plan as stipulated in the COBRA regulations.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 entitles one to have health insurance coverage up to 18 months after leaving a former employer. This is a good stop-gap option for the person who was formerly employed and has decided to pursue a career on his own.

However, take note that the COBRA regulations have certain restrictions. In order to qualify for this program, the former employer should have at least 20 employees. If a person was fired due to negligence or because of some undesirable reason, then the employer may deny continued coverage to this person.

Always remember that invoking the rights under the COBRA rule is a temporary option only. Within 18 months, a person will need to find his own health insurance plan.

Trade and Social Association Group Plan

When establishing one's own business, it might be useful to find a trade association that offers group insurance plans for members. Professional groups, alumni associations, and other social organizations also implement group coverage.

The best thing to do is to join these groups, or find a trade association related to a specific profession or industry. There is a comprehensive list of trade associations offering health insurance provided in the Consumer Action Handbook, as listed by the Federal Citizen Information Center.

Once a person becomes a member, he is then eligible to join its group health insurance plan. While coverage may not be as good as that provided through traditional health insurance companies, it can be a great option, especially if the health of the member is relatively stable. It is also important to note that these types of group health plans vary from organization to organization. Be prepared to do heavy research before deciding on which trade association provides the best coverage for members.

Other Health Insurance Options for the Self-Employed

Another feasible way to get health insurance is to use that provided by a spouse's company. Just make sure that the spouse works for a large company that offers employer-sponsored group insurance, or else it can be just as expensive as getting medical coverage alone, or the coverage may not be good.

Another option available is to get an individual plan. Research several health insurance companies or brokers that offer medical coverage for self-employed individuals. Take note that individual plans are always underwritten, so if there are serious health conditions to consider, then an individual plan can become very expensive. In fact, some insurance companies may also deny coverage for individuals with a pre-existing condition. But if a person is fit, healthy, and still in his prime, then individual health insurance is a favorable option.

In worst cases, a person may have to resort to unconventional methods just to get health insurance coverage. Consider getting a side job or a part time job. Find an employer that offers group insurance for its part-time employees. Take the part-time job just to get a health plan. Most of the time, a side job salary is enough to pay for the premium of the insurance.

Getting a quality health insurance plan for the self-employed is not easy. It requires much research to study all of the options available. The good thing is that it is not impossible to find the best health insurance options for the small business owner. There are lots of health plans out there. It's choosing the medical coverage that one thinks will serve him best in the long run that is a challenge.

The copyright of the article Health Insurance Options for the Self-Employed in Self-Employment is owned by Denise Oliveri. Permission to republish Health Insurance Options for the Self-Employed in print or online must be granted by the author in writing.