Health Insurance for the self-employed

Losing out on employer-sponsored health insurance can be a big concern for people looking to make the leap to self-employment. The average cost of buying an individual health insurance plan can easily cost up to four times as much as your contribution towards your employer plan. Many sole proprietors choose to forego health insurance because of its expense, but that is certainly not the ideal course to take. After all, it hardly makes sense to run a business without insuring its primary asset - you, the owner. What are the health insurance options open for the self-employed? COBRA                                                                        Self-employed workers or business owners are sometimes covered under a former employer's plan through the federal COBRA regulation (Consolidated Omnibus Budget Reconciliation Act). COBRA states that employers who offer group health insurance and have at least 20 employees must allow an employee to continue the group coverage after he leaves their job. The employer is allowed to charge the employee the full cost of the coverage plus 2 percent for administrative expenses, which can result in a significant increase in the cost of coverage for the employee but may still not be as expensive as a personal policy. In addition, the period of coverage is usually limited to 18 months, so COBRA is a temporary solution to health insurance coverage at best. Spousal Insurance                                                One of the most common ways for the self-employed to obtain health insurance coverage is through a spouse's plan. If your spouse works for a large employer, this is often the simplest and most cost-effective way to obtain coverage for you and the rest of the family. Individual Plans If you're healthy, an individual plan can be another good option. Individual plans are offered through insurance brokers or sometimes directly from the insurance companies themselves. If you have some health issues, you may find that the coverage is quite a bit more expensive. But, as of 2014, the federal Affordable Care Act will prohibit insurers from denying you a policy due to a preexisting condition. Associations Some self-employed workers are members of associations, such as professional or alumni groups, that make health insurance available to their members. The quality of this kind of coverage can vary considerably, and the plan may or may not be underwritten. A good place to start would be with your local chamber of commerce and then expand out from there. Even if they don't offer their members a health insurance plan, they can probably point you in the right direction of a group that does. Small business group plan If you hire an employee (your spouse, for instance) you may be eligible to buy a small group insurance plan. This could come in handy, if you have a pre-existing condition. Some states require that health insurers offer guaranteed issue group health plans to small groups. And, presumably, that means that your group can't be turned down, even if the group has members with health issues. You'll probably need an insurance broker to help set this up. Some states also have health benefits associations that provide insurance for small-business owners with at least two employees. The world of health insurance is rapidly changing. In the long run, many of the healthcare reforms taking effect in 2014 will help the self-employed purchase health insurance hassle-free.