30 Comments

Summary:

For web workers, and anyone self-employed, obtaining affordable and comprehensive health insurance is one of our biggest challenges. Don’t put it off…you never know when a catastrophic illness or accident will affect you or your family. Last night in his State of the Union address, President […]

For web workers, and anyone self-employed, obtaining affordable and comprehensive health insurance is one of our biggest challenges. Don’t put it off…you never know when a catastrophic illness or accident will affect you or your family. Last night in his State of the Union address, President Bush introduced a plan to try and make it easier for individuals who don’t have insurance through employers to get covered. Without getting political, is it enough? Depending on where you live, Individual market health insurance for a family of four can cost $1,000 per month or more, and typically offer higher deductibles and less benefits than group-purchased plans through an employer.

While we watch this insurance-reform-through-the-tax-code wind its way through the political process, there are some resources online to help us make insurance decisions today. Apologies to our international readership, this post only applies to web workers living in the United States. If you live outside the US, and have tips to share, please leave a comment.

Steve Case’s new Revolution Health website, currently in public preview, has some helpful and clear information available on the subject. Read GigaOm’s coverage of Revolution Health here.

You enter your zip code and some data about yourself and the members of your family you want to cover, and the site clearly lays out plans that may be available. Unfortunately, the comparison service does not currently work in HI, WV, VT, RI, ME, OR, MN, MA or NY. If you live in a searchable state, it serves as a good starting point. Results may vary. For my own zip code, only one provider’s plans were listed. This is similar to other insurance search/comparison sites such as ehealthinsurance.com. Revolution Health will be adding broker services this year. In the meantime, the site’s educational articles on insurance are very easy to read and understand.

The State Coverages Initiatives website has a great deal of information on specific insurance programs that may be available in your state, including group purchasing arrangements for the self-employed and small business owner. Don’t miss their state coverage matrix which lists options state-by-state.

The Health Insurance Resource Center is another easy-to-understand site with a special section to address the needs of the self-employed.

You might want to look at the associations and professional organizations you belong to. Many are connected to local brokers who may offer discounts for members, or they may be purchasing association health insurance directly. Look for larger organizations that serve a local audience, such as a Chamber of Commerce. Step cautiously, as there have been some scandals with disreputable companies here. Check credentials, and talk to others.

Once you’ve found an acceptable insurance policy, talk to your accountant about the tax implications. Did you know that if you’re self-employed (and turning a profit), you can deduct up to 100% of your insurance premiums on your return?

AllFreelance.com has compiled some resources for getting quotes and information on health insurance for the self-employed.

There are a lot of issues around insurance that are too complicated to cover here. Do your homework and talk to brokers and other professionals. Revolution Health has some tips here. Don’t rely on the Internet alone to answer all your questions.

Web workers, how are you handling the challenge of health insurance? Do you think the President’s new plan will help?

You’re subscribed! If you like, you can update your settings

  1. I’ve had my FileMaker Pro consulting practice for almost 20 years and during much of that time have purchased my own health insurance. As mentioned it was frustrating and expensive. I dreaded the annual renewal because rates would go up hundreds of dollars and I’d often waste a lot of time contacting agents and searching for new plans that I could afford.

    Two years ago, my wife found a full-time job with a local school district that offered excellent coverage. For the first time our family had dental coverage in addtion to only a co-pay rather than a high deductible. What a savings!

  2. For independent workers in New York, the best choice seems to be Freelancers Union, which offers group-rate coverage. See my post on Freelancers Union at the Woven blog.

  3. great post – I know so many friends who will benefit from read this. thx!

  4. I’m a US citizen web working in Central America. Does anyone know of any reasonable plans that permit you to live out of the US?

  5. I have a lot of questions about this plan. Why do I get a tax break if my employer is providing insurance to me? I don’t need the break, it’s covered, right? What tax bracket do I need to be in to benefit from this additional tax break? How will employers respond to this break to their employees – will this encourage them to pass the costs on to the workers? The 4500./60k tax break is fine for families that earn that much, what about lower income families? Will they earn the same tax credit and more importantly, given their income level, will they be able to really use that break to pay for their coverage? With all these additional tax breaks, where will the funding come for the proposed basic health plans?

    I’m not expecting WWD to answer these questions, but I do hope that those who are working on this new proposal are asking them. Personally, I don’t need more deductions, I max out on them already. I need an affordable complete plan that offers better coverage (dental and optical, anyone?) without dinging me with copays, prescription costs, high deductibles, rejected claims due to complex referral rules…and so on.

  6. If you are reasonably healthy, it’s easy to choose a plan with a high deductible and get a huge discount on your monthly rate. You pay more each time you make a visit to the doc but the monthly savings more than make up the difference.

  7. Independent Web workers in Washington state doing anything software-ish may want to check out the Washington Software Alliance – you can get into their group Blue Shield as a member firm, and you can be a member firm with as few as one employee.

  8. Marry someone who works for an employer! Okay, that is not really a good way to solve the health insurance problem. I found that out when my husband was “down-sized” and thought he, too, should become a freelancer. Never mind that just our COBRA payments were $860 a month; to get that same coverage once COBRA expired was going to cost in four figures.

    Web workers should not wait until they need health insurance to get some. At minimum, you need to have catastrophic coverage in case you end up in the hospital from an accident or serious illness. This can cost under $100 a month.

    For long-term reasons, you also need a history of health care coverage to be able to upgrade to higher levels of benefits in many insurance companies. Currently covered individuals often get better rates than those who have no history of health care coverage.

    If you are covered by a spouse’s insurance, you have health care coverage history. You should find out what the costs are to convert to private pay with the same company if your spouse leaves the company or if you leave your spouse.

    I wouldn’t hold my breath waiting for the politicians to provide universal health care, or even any substantial help.

  9. I personally use a plan with a very high deductible ($5K). It is a PPO plan. In the end it works out that if I need to use medical to the max that year I’m out about $1500. But if I don’t I’m a couple grand a head. Use it wisely, I did have a broken bone a couple of years ago that happened to stretch out from December of one year to January of the next, that’s right $10K in medical bills. It’s a gamble for sure.

  10. I have been listening to radio discussions of the new plan and people supporting it keep saying freelancers currently get no deduction for their premiums. I don’t think that’s exactly true, since there is some deductibility for those of us with large enough healthcare costs who itemize or people who technically have the plan set up as part of their business and make a profit. (Not being an accountant, I may be off on this, but I think this is right.) That said, access to good healthcare for freelancers is a huge problem and President Bush’s plan offers little reprieve. Many freelancer’s barely make enough to behefit from deduction-type benefits. (By the way, Dave Notik is right about Freelancer’s Union in NY. It is great and needs to be cloned in other states.)

    I am especially concerned by the hidden time bomb called the Alternative Minimum Tax (AMT), which has slowly been trapping more and more people. Basically, there is a tax that hits you at a certain income level and, no matter what deductions you think you are entitled to, this tax can force you to pay the formulaic minimum. I would imagine this would include the new healthcare deductions that our president claims is designed to help so many. Just something to watch out for as inflation pushes more of us into the AMT trap.

Comments have been disabled for this post