A reader asks:
I am looking at striking out on my own and working for myself freelance. However, leaving the security of a W-2 job includes losing my health insurance benefits. I have no children, but I am married and must provide health insurance for both of us. Suggestions?
We’ve tackled the question in the past, with no clear “this is what you do” solutions. Even if you can find coverage at a semi-reasonable price, quite often the package of coverage is inferior to what is available through an employer, with higher deductibles and co-pays and less offered services. It also depends on where you live, your personal history and budget and whether you need family coverage.
So we turn to our wonderful WWD community for guidance…what do you do for health insurance? Share your tips, challenges and successes.
Move to Canada.
Although our health care system is not perfect at least you can get it at a reasonable price.
I think the answer to this question is driven by your locality. Here in the Philly area there are two major players: Independence Blue Cross and Aetna. Docs around here don’t know what to do with anything else. I’d suggest that you simply find out what insurers local employers use – then call those insurers directly and find out what they offer to individuals. I got lucky – IBX and Aetna offer an HMO here that is somewhat reasonable.
I also tried via the area Chambers of Commerce – the quotes were quite expensive and had a bizarre policy of only accepting new customers that have been uninsured for 3 months prior to the effective date (I’m NOT making that up). Also watch out for pre-existing clauses. My understanding is that if you are coming off a group policy, you should be ok – but ask… and ask again.
Until America gets around to adopting a sane health care system, that is the sort of nonsense you may need to deal with. In short – don’t assume anything to be true – especially if it appears to make sense.
Good luck!
Check out NASE – National Association of Self-Employed (nase.org). You can get decent health benefits through their group (usually underwritten by Mega Health Insurance). We used them for 2 years before I sold one of my product lines to a company and joined into their plan.
For the Bible-believing web workers, the company that I use for my health care is a need sharing organization called Samaritan Ministries. It’s a great alternative to costly health insurance… and the monthly amounts are very reasonable!
You can check them out at SamaritanMinistries.org.
The Christian Brotherhood is another faith-based program that I use. Low monthly cost. Catastrophic coverage. I still can’t get my company to pay for the $35 single-coverage monthly fee – though I’m saving them nearly $600 a month by not participating in the company health plan. Downside: $5000 “deductable”. Upside: did I mention the $35/month?
I was laid off with a bag-o-money a couple of years back, and had to make this transition for my family (wife and two children). I stayed on COBRA much longer than I should have, with premiums costing about $1300/month towards the end. This was a continuation of Microsoft’s health plan, which is very good (covered anywhere, pretty much no deductable, et cetera).
Fortunately, I’d had ACL surgery the year before, so had a good benchmark for catastrophic expenses as well as preventative only. I created a spreadsheet with every medical plan available to me, for a bunch of different ratios of catastrophic-to-nonevent years.
I could go on, but here are some observations from my perspective. First of all, you have to realize that everybody pays for medical insurance, but typically the cost is hidden to you. As an employee, my employer withholds money from my paycheck so they can cover my premiums. In government-sponsored systems, the government withholds your money. It’s just that when you become a direct customer, those costs are finally made transparent.
Anyway, here’s the bottom line. For all scenarios, all plans, I found that high-deductable policies win handily. Right now (WA state) I’m paying about $385 to cover my entire family, with a 75% deductable plan, and most doctors covered in their network. Some preventative visits are covered. The thing is, if I have a doctor visit and am still covering my deductable, I still come nowhere near what my monthly COBRA premiums were. You just have to get used to whipping out your checkbook more often, but you still have fewer dollars leaving your household.
One more thing: what makes high-deductable policies quite tenable is the MOPE (Maximum Out of Pocket Expense). I wasn’t aware of this until I did my research. You have four phases of spending: (1) covering your deductable, (2) covering your non-deductable [like, say, 25%], (3) paying nothing [once you've hit your MOPE], and, God forbid, (4), you’ve hit your lifetime maximum, and you’re on your own. Our mope is something like $10000. Once we’ve co-paid that much (through deductables, co-pays, and everything else), insurance covers everything. Key point: a high-deductable policy won’t leave you penniless due to catastrophic expenses.
Finally, whatever it takes, don’t leave yourself uninsured. Once you’re hit with a big illness or medical condition while uninsured, you are locked out. That’s a very foolish risk to take.
Private Health Insurance was a lot more reasonable than I had expected. It helped that I’m single, but the rates for a spouse were decent. It does get pricier when you start talking kids, although I can’t compare it to what a company’s plan would cost.
I quit my job while my wife was pregnant and continuity was VERY important to me. At the time I had one option with my current provider – their non-group rate. $1200/month for the two of us with the same coverage. I took it. (It went up to over $1300 after the baby arrived.)
We have a new law in Massachusetts that you may have heard of – it essentially makes anyone without coverage a criminal (in reality they just lose a state tax credit). The state had to provide options to people who couldn’t afford to suddenly acquire insurance, and just a month ago our provider opened up a slew of options for non-group rates. A family can get good HMO coverage for as low as $750 with HIGH deductibles. In our case, we migrated over to the plan that matched our non-group rate in coverage, the second from best HMO plan, and the price went down a bit. I think we’re paying around $1250/mth now for us and the baby.
Far from ideal. I’m not bound to a Chamber or anything, though.
http://www.freelancersunion.org/ now offers coverage in many states. It was previously limited to NY. You can sign up there and get a group rate through them. Unfortunately they weren’t able to extend to MA.
Look at the Freelancers Union (www.freelancersunion.org) for the chance to get health insurance in 30 states, explicitly not including Massachusetts.
There’s a ton of good information here, thanks everyone!
It’s definitely dependent on where you live. For example, in Colorado you can get a “business group of 1″ policy that offers a guaranteed coverage if you meet certain self employment requirements. I found, however, that those policies were far more expensive than getting medically underwritten (i.e., not guaranteed, looks at past usage of health care) individual coverage for my family of five.
We made the compromise to get a policy that doesn’t cover brand-name prescription drugs (we weren’t offered brand-name coverage due to prior usage, especially my usage of Imitrex for migraines). This is not too terrible but leaves us uncovered in case of some sort of health disaster like a cancer that would be best treated by some fancy new drug. Long term, it’s not something I’m willing to keep gambling on so in the new year hope to make other arrangements. May have to go for the expensive BGO1 policy.
I second Steve Hollasch’s suggestion that you look at high deductible health plans. That’s what we’ve gone with for a family of five and the price was shockingly low (granted, without brand name prescription coverage though). With an HDHP, you can also open a health savings account to which you can make tax-deductible contributions then use that money to pay for whatever’s not covered. You don’t lose the money so if you don’t use it and keep saving year after year, you could create a nice little health care savings cushion for yourself.
I’d recommend that if you’re looking for your own health insurance, find a good broker in your area who understands the options both from a legal perspective (e.g., Colorado’s BGO1 coverage) and from the perspective of which insurers in your area are likely to provide good plans. In Colorado, check coloradohealth.com — the broker I worked with there really knew her stuff.