Help! I'm Self-Employed and I Need Health Insurance!

Many people who have thought about the joys of self-employment are often discouraged when they realize health insurance will be their sole responsibility. In the past, particularly before 2002, health insurance premiums for the self-employed were not tax deductible. While all of that has changed, premiums for the self-employed are still higher than group insurance. Unfortunately, too many business owners decide to fore-go health insurance and fall into an expensive trap when they need it (often after an accident). Health insurance for the self-employed can come in many packages and price ranges. For instance, for someone who is a freelancer or contractor they may benefit with a standard individual policy that offers indemnities or a managed care plan.

An indemnity plan gives you a wide range of doctors to choose from as well as the ability to see a specialist without a referral. On the flip side, premiums under an indemnity are higher and you usually have to pay up front costs for a doctor's visit, which the insurance company will reimburse you later. Most indemnity plans also require you to pay an annual deductible BEFORE the insurance company begins to pay on your claims. This as you can imagine can get real costly, especially, if you have a lack of capital.

Managed Care Plans

Managed care plans can be HMO, PPO, and POS plans. These plans also differ greatly between the three of them. An HMO (Health Maintenance Organizations) typically have lower out-of-pocket costs but also offer the least amount of flexibility in choosing a physician. You are also required to choose a primary care physician and you need a referral to see a specialist. HMO's however typically have low co-payments and you are not required to pay a deductible before your coverage begins.

A PPO (Preferred Provider Organization) plan offers a decent amount of doctors to choose from in the network at a discounted rate. As a member, you typically won't need a primary care physician or a referral to a specialist. You may also be responsible for paying a co-pay and possibly an annual deductible.

Members under a POS (Point of Service) plan enjoys the combination of services under both HMO and PPO plans. You still are required to choose a primary care physician and preventive care visits are typically covered. However, if you choose to go outside your network of providers you will be subject to pay up-front costs and submit the claim to your insurance company yourself.

In some states group insurance for one person, usually referred to as "groups of one" offer insurance to self-employed persons as well. It would be a good idea to research some websites regarding health insurance for the self-employed. At any rate, you will need it and it's always better to be safe than sorry. Some sites to check out are:

http://www.healthinsuranceinfo.net/

http://www.nase.org

http://www.nasro-co-op.com/

http://www.ehealthinsurance.com/